Vidhi Codex

The Depositories Act, 1996

The Depositories Act, 1996

Corporate199660 sections5 chapters

The Depositories Act, 1996, establishes a legal framework for managing securities in a digital, paperless format instead of using physical certificates. It regulates depositories—specialized companies acting as electronic warehouses—alongside their participants, companies issuing shares, and individual investors known as beneficial owners. This law is vital because it eliminates major risks associated with paper documents, such as forgery, theft, and long settlement delays. By enabling securities to be held and transferred electronically through simple book entries, the Act ensures faster, safer, and more efficient trading while providing a secure system for instant ownership changes. This modernization empowers investors by ensuring free transferability of assets.

Start reading →Read full ActSections

Chapter I PRELIMINARY →

  1. 1Short title, extent and commencement.
  2. 2Definitions.

Chapter II CERTIFICATE OF COMMENCEMENT OF BUSINESS →

  1. 3Certificate of commencement of business by depositories.

Chapter III RIGHTS AND OBLIGATIONS OF DEPOSITORIES, PARTICIPANTS, ISSUERS AND BENEFICIAL OWNERS →

  1. 4Agreement between depository and participant.
  2. 5Services of depository.
  3. 6Surrender of certificate of security.
  4. 7Registration of transfer of securities with depository.
  5. 8Options to receive security certificate or hold securities with depository.
  6. 9Securities in depositories to be in fungible form.
  7. 10Rights of depositories and beneficial owner.
  8. 11Register of beneficial owner.
  9. 12Pledge or hypothecation of securities held in a depository.
  10. 13Furnishing of information and records by depository and issuer.
  11. 14Option to opt out in respect of any security.
  12. 15Act 18 of 1891 to apply to depositories.
  13. 16Depositories to indemnify loss in certain cases.
  14. 17Rights and obligations of depositories, etc.

Chapter IV ENQUIRY AND INSPECTION →

  1. 18Power of Board to call for information and enquiry.
  2. 19Power of Board to give directions in certain cases.
  3. 19-IFactors to be taken into account by adjudicating officer.
  4. 19-IASettlement of Administrative and Civil Proceedings
  5. 19-IBRecovery of amounts.
  6. 19-ICContinuance of proceedings.
  7. 19APenalty for failure to furnish information, return, etc.
  8. 19BPenalty for failure to enter into an agreement.
  9. 19CPenalty for failure to redress investors‟ grievances.
  10. 19DPenalty for delay in dematerialisation or issue of certificate of securities.
  11. 19EPenalty for failure to reconcile records.
  12. 19FPenalty for failure to comply with directions issued by Board under section 19 of the Act.
  13. 19GPenalty for contravention where no separate penalty has been provided.
  14. 19HPower to adjudicate.
  15. 19JCrediting sums realised by way of penalties to Consolidated Fund of India.
  16. 19FAPenalty for conduct business in a fair manner.

Chapter V MISCELLANEOUS →

  1. 20Offences
  2. 21Offences by companies.
  3. 22Cognizance of offences by courts
  4. 22AComposition of certain offences.
  5. 22BPower to grant immunity.
  6. 22CEstablishment of Special Courts
  7. 22DOffences triable by Special Courts
  8. 22EAppeal and revision
  9. 22FApplication of Code to proceedings before Special Court
  10. 22GTransitional provisions.
  11. 23Appeals.
  12. 23AAppeal to Securities Appellate Tribunal.
  13. 23BProcedure and powers of Securities Appellate Tribunal.
  14. 23CRight to legal representation.
  15. 23DLimitations.
  16. 23ECivil Court not to have jurisdiction
  17. 23FAppeal to Supreme Court
  18. 23GPowers of Board not to apply to International Financial Services Centre.
  19. 24Power of Central Government to make rules.
  20. 25Power of Board to make regulations.
  21. 26Power of depositories to make bye-laws.
  22. 27Rules and regulations to be laid before Parliament.
  23. 28Application of other laws not barred.
  24. 29Removal of difficulties
  25. 30Repealed..
  26. 30AValidation of certain acts.
  27. 31Repeal and saving.

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