Every depository shall, in its bye-laws, state the specific securities which are eligible for being held in dematerialised form in the depository (Regulation 27)
Securities Eligible for Being Held in Dematerialised form in a Depository (Regulation 28)
shares, scrips, stocks, bonds, debentures, debenture stock or other marketable securities of a like nature in or of any incorporated company or other body corporate;
units of mutual funds, rights under collective investment schemes and venture capital funds, commercial paper, certificates of deposit, securitised debt, money market instruments and government securities unlisted securities shall also be similarly eligible for being held in dematerialised form in a depository.
Agreement between Depository and Issuer (Regulation 29):
Either on the issuer or on the investors exercising an option to hold his securities with a depository in dematerialised form, the issuer shall enter into an agreement with a depository to enable the investor to dematerialise the securities. No agreement shall be required to be entered into where depository itself is an issuer of securities. Further that no agreement shall also be required to be entered into where State or Central Government is the issuer of Government securities
Where the issuer has appointed a Registrar to the Issue or Share Transfer Agent, who has been granted certificate of registration by the Board the depository shall enter into a tripartite agreement with the issuer and the Registrar to the Issue or Share Transfer Agent, as the case may be, in respect of the securities to be declared by the depository as eligible to be held in dematerialised form.
Systems and procedures (Regulation 30): Every depository shall have systems and procedures which will enable it to co-ordinate with the issuer or its agent, and the participants, to reconcile the records of ownership of securities with the issuer or its agent, and with participants, on a daily basis.
Connectivity (Regulation 31): Every depository shall maintain continuous electronic means of communication with all its participants, issuers or issuers' agents, as the case may be, clearing houses and clearing corporations of the stock exchanges and with other depositories.
Transfer to be affected only after payment (Regulation 32): The depository shall satisfy the Board that it has a mechanism in place to ensure that the interest of the persons buying and selling securities held in the depository are adequately protected and shall register the transfer of a security in the name of the transferee only after the depository is satisfied that payment for such transfer has been made.
Withdrawal by participant (Regulation 33) : Every depository shall allow any participant to withdraw or transfer its account, if the request for such withdrawal or transfer is in accordance with conditions stipulated therefor in the bye-laws of the depository.
Internal Monitoring, Review and Evaluation of Systems and Controls (Regulation 34):Every depository shall have adequate mechanisms for the purposes of reviewing, monitoring and evaluating the depository's controls, systems, procedures and safeguards.
External monitoring, review and evaluation of systems and controls (Regulation 35)Every depository shall cause an inspection of its controls, systems, procedures and safeguards to be carried out annually and forward a copy of the report to the Board.
Insurance against risks (Regulation 36) : Every depository shall take adequate measures including insurance to protect the interests of the beneficial owners against risks likely to be incurred on account of its activities as a depository.
Manner of keeping records (Regulation 37) : Where records are kept electronically by the depository, it shall ensure that the integrity of the automatic data processing systems is maintained at all times and take all precautions necessary to ensure that the records are not lost, destroyed or tampered with and in the event of loss or destruction, ensure that
Records to be maintained (Regulation 38) : Every depository shall maintain the following records and documents and further intimate the Board the place where the records and documents are maintained. the depository shall preserve records and documents for a minimum period of five years. This is Subject to the provisions of any other law,-
records of securities dematerialised and rematerialised;
the names of the transferor, transferee, and the dates of transfer of securities;
a register and an index of beneficial owners;
details of the holdings of the securities of the beneficial owners as at the end of each day.
records of instructions received from and sent to participants, issuers, issuers' agents and beneficial owners;
records of approval, notice, entry and cancellation of pledge or hypothecation, as the case may be;
details of participants;
details of securities declared to be eligible for dematerialisation in the depository; and
such other records as may be specified by the Board for carrying on the activities as a depository.
Co-operation with other entities (Regulation 39): Every depository shall extend all such co-operation to the beneficial owners, issuers, issuers' agents, custodians of securities, other depositories and clearing organizations as is necessary for the effective, prompt and accurate clearance and settlement of securities' transactions and conduct of business.
Prohibition of Assignment (Regulation 40): No depository shall assign or delegate to any other person its functions as a depository, without the prior approval of the Board.
Agreement by participant (Regulation 41): Every participant shall enter into an agreement with a beneficial owner before acting as a participant on his behalf, in a manner specified by the depository in its bye-laws.(Regulation 41)
Separate Accounts (Regulation 42):Separate accounts shall be opened by every participant in the name of each of the beneficial owners and the securities of each beneficial owner shall be segregated, and shall not be mixed up with the securities of other beneficial owners or with the participant's own securities.
A participant shall register the transfer of securities to or from a beneficial owner's account only on receipt of instructions from the beneficial owner and thereafter confirm the same to the beneficial owner in a manner as specified by the depository in its bye-laws.
Every entry in the beneficial owner's account shall be supported by electronic instructions or any other mode of instruction received from the beneficial owner in accordance with the agreement with the beneficial owner.
Statement of accounts (Regulation 43): Every participant shall provide statements of account to the beneficial owner in such form and in such manner and at such time as provided in the agreement with the beneficial owner.
Transfer or Withdrawal by Beneficial Owner (Regulation 44):
Every participant shall allow a beneficial owner to withdraw or transfer from his account in such manner as specified in the agreement with the beneficial owner.
Connectivity (Regulation 45): Every participant shall maintain continuous electronic means of communication with each depository in which it is a participant. Monitoring, reviewing and evaluating internal systems and controls
Every participant shall have adequate mechanism for the purposes of reviewing, monitoring and evaluating the participant's internal accounting controls and systems.(Regulation 46)
Reconciliation (Regulation 47):
Every participant shall reconcile his records with every depository in which it is a participant, on a daily basis.
Returns: (Regulation 48): Every participant shall submit periodic returns to the Board and to every depository in which it is a participant in the format specified by the Board or the bye-laws of the depository
Submission of Reports (Regulation 49):Every participant shall submit periodic returns to the Board and to every depository in which it is a participant in the format specified by the Board or the bye-laws of the depository, as the case may be.
