Securities and Exchange Board of India (Depositories and Participants) (Second Amendment) Regulations, 1997. - S.O. No.640(E) - SEBI/LE XVI/ii - SEBI

SECURITIES AND EXCHANGE BOARD OF INDIA NOTIFICATION Mumbai, the 5th September, 1997 S.O. 640(E).-- In exercise of the powers conferred by sub-section (1) of 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 Board hereby makes the following regulations to amend the Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996. 1. (i) These regulations may be called the Securities and Exchange Board of India (Depositories and Participants) (Second Amendment) Regulations, 1997. (ii) They shall come into force on the date of their publication in the Official Gazette. 2. In regulation 29 the following be added after sub-regulation (1) and before sub-regulation (2):- Provided that no agreement shall be required to be entered into where the depository itself is an issuer of securities. 3. In regulation 58, sub-regulations (1) to (12) be substituted by the following new sub-regulations (1) to (11.):- (1) If a beneficial owner intends to create a pledge on a security owned by him he shall make an application to the depository through the participant who has his account in respect of such securities. (2) The participant after satisfaction that the securities are available for pledge shall make a note in its records of the notice of pledge and forward the application to the depository. (3) The depository after confirmation from the pledgee that the securities are available for pledgor with the pledgor shall within fifteen days of the receipt of the application create and record the pledge and send an intimation of the same to the participants of the pledgor and the pledgees. (4) On receipt of the intimation under sub-regulation (3) the participants of both the pledgor and the pledgee shall inform the pledgor and the pledgee respectively of the entry of creation of the pledge, (5) If the depository does not create the pledge, it shall send along with the reasons an intimation to the participants of the pledgor and the pledgee. (6) The entry of pledge made under sub-regulation (3) may be cancelled by the depository if pledgor or the pledgee makes an application to the depository through its participant. Provided that no entry of pledge shall be cancelled by the depository without prior concurrence of the pledgee. (7) The depository on the cancellation of the entry of pledge shall inform the participant of the pledgor. (8) Subject to the provisions of the pledge document, the pledgee may invoke the pledge and on such invocation, the depository shall register the pledgee as beneficial owner of such securities and amend its records accordingly. (9) After amending its records under sub-regulation (8) the depository shall immediately inform the participants of the pledgor and pledgee of the change who in turn shall make the necessary changes in their records and inform the pledgor and pledgee respectively. (10) (a) If a beneficial owner intends to create a hypothecation on a security owned by him he may do so in accordance with the provisions of sub-regulations (1) to (9). (b) The provisions of sub-regulations (1) to (9) shall mutadis mutandis apply in such cases of hypothecation. Provided that the depository before registering the hypothecatee as a beneficial owner shall obtain the prior concurrence of the hypothecator, (11) No transfer of security in respect of which a notice or entry of pledge or hypothecation is in force shall be effected by a participant without the concurrence of the pledgee or the hypothecatee as the case may be. [F. No. SEBI/LE XVI/ii] D. R. MEHTA, Chairman Footnote :-(1) SEBI (Depositories and Participants) Regulations. 1996, the principal regulation, was published in the Gazette of India on May 16, 1996, vide S.O. No. 345(E). (2) SEBI (Depositories and Participants) Regulations, 1996 was amended by SEBI (Depositories and Participants) Amendment Regulations. 1997 which was published in the Gazette of India on February 7, 1997 vide S.O, No. 91(E).