SECURITIES AND EXCHANGE BOARD OF INDIA
Mumbai, the 3rd October, 2018
SECURITIES AND EXCHANGE BOARD OF INDIA (DEPOSITORIES AND PARTICIPANTS) REGULATIONS, 2018
No. SEBI/LAD-NRO/GN/2018/40.- In exercise of the powers conferred by section 30 of the Securities and Exchange Board of India Act, 1992 (15 of 1992) read with section 25 of the Depositories Act, 1996 (22 of 1996), the Securities and Exchange Board of India hereby makes the following regulations, namely:
Short title and commencement
1. (1) These regulations may be called the Securities and Exchange Board of India (Depositories and Participants) Regulations, 2018.
(2) They shall come into force on the date of their publication in the Official Gazette.
2. (1) In these regulations, unless the context otherwise requires, the terms used in these regulations shall bear the meanings assigned to them below, and their cognate expressions shall be construed accordingly,-
(a) “Act” means the Securities and Exchange Board of India Act, 1992 (15 of 1992);
(b) “applicant” means any person or persons who, acting alone or in combination with another person proposes to establish a depository under these regulations and holds fifteen percent shareholding of the depository;
(c) “associate” shall have the same meaning as assigned to it under clause (b) of sub-regulation (1) of regulation 2 of the Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2018 or any amendments thereof;
(d) “Board” means the Securities and Exchange Board of India established under section 3 of the Securities and Exchange Board of India Act, 1992 (15 of 1992);
(e) “change in control” –
(i) in case of a body corporate –
(A) if its shares are listed on any recognised stock exchange, shall be construed with reference to the definition of control in terms of regulations framed under clause (h) of sub-section (2) of section 11 of the Act;
(B) in any other case, shall be construed as change in the controlling interest in the body corporate;
Explanation: For the purpose of para (B) of this sub-clause, the expression “controlling interest” means an interest, whether direct or indirect, to the extent of at least fifty-one percent of voting rights in the body corporate;
(ii) in a case other than that of a body corporate, shall be construed as any change in its legal formation or ownership.
(f) “control” shall have the same meaning as assigned to it under clause (e) of sub-regulation (1) of regulation 2 of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 or any amendments thereof;
(g) “Depositories Act” means the Depositories Act, 1996 (22 of 1996);
(h) “form” means any of the forms specified in the First Schedule;
(i) “governing board” means the board of directors of a depository;
(j) “inspecting officer” means any person authorised by the Board under regulation 84;
(k) “key management personnel” would include a person serving as head of any department, or in such senior executive position that stands higher in hierarchy to the head(s) of the department(s) in the depository, or any person who directly reports to chief executive officer or to the director of the governing board of the depository, or any person upto two levels below the chief executive officer or managing director, or any other person as may be identified by its Nomination and Remuneration Committee
(l) “persons acting in concert” in the context of acquisition or holding of shares or voting rights or control shall mutatis mutandis have the same meaning as assigned to it in clause (q) of sub-regulation (1) of regulation 2 of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 or any amendments thereof;
(m) “public interest director” means an independent director representing the interests of investors in securities market and who is not having any association, directly or indirectly, which in the opinion of the Board, is in conflict with his role;
(n) “regulatory department” means a department of a depository which is entrusted with regulatory powers and duties and includes such department as may be specified by the Board;”
(o) “Schedule” means any of the Schedules annexed to these regulations;
(p) “shareholder director” means a director who represents the interest of shareholders, and elected or nominated by such shareholders who are not depository participants, or their associates and agents;
(2) Words and expressions used and not defined in these regulations but defined in the Act, the Securities Contracts (Regulation) Act, 1956, the Depositories Act, 1996, the Companies Act, 2013 or any rules or regulations made thereunder shall have the same meanings respectively assigned to them in those Acts, rules or regulations made thereunder or any statutory modification or re-enactment thereto, as the case may be.
REGISTRATION OF DEPOSITORY
Application for grant of certificate of registration
3. (1) No person shall establish a Depository unless he has obtained registration from the Board in accordance with the Act, the Depositories Act, 1996 and these regulations.
(2) An application for the grant of a certificate of registration as a depository shall be made to the Board by an applicant in Form A of the First Schedule, shall be accompanied by the fee specified in Part A of the Second Schedule and be paid in the manner specified in Part B thereof.
(3) The application shall be accompanied by draft bye-laws of the depository that is proposed to be set-up.
Application to conform to the requirements
4. An application in Form A of the First Schedule which is not complete in all respects and does not conform to the instructions specified therein shall be rejected:
Provided that before rejecting any such application, the applicant shall be given in writing an opportunity to remove, within thirty days of the date of communication in this regard, the objections indicated by the Board:
Provided further that the Board may, on being satisfied that it is necessary to extend the period specified in the first proviso, extend such period by such further time as it thinks necessary in order to enable the applicant to remove the objections indicated by the Board.
Furnishing of information, clarification and personal representation
5. (1) The Board may require the applicant to furnish such further information or clarification regarding matters relevant to the activity of the depository for the purpose of consideration of the application.
(2) The applicant or his authorised representative shall, if so required, appear before the Board for personal representation, in connection with the grant of certificate of registration.
Consideration of application for grant of certificate of registration
6. (1) The Board shall not consider an application under regulation 3, unless the applicant belongs to the category of shareholders eligible to hold upto 15% share capital of the depository in terms of sub-regulation (1) and (2) of regulation 21.
2) The Board shall not consider an application under regulation 3, unless the applicant is a fit and proper person as described in sub-regulation 2 of regulation 23.