Section 7 in The Securities And Exchange Board Of India (Depositories And Participants) Regulations, 1996
7. Grant of certificate of registration.-
After considering the application under regulation 3, with reference to the qualifications specified in regulation 6, if the Board is satisfied that the company established by the sponsor is eligible to act as depository, it may grant a certificate of registration in Form B to the depository subject to the following, namely: -(a)the depository shall pay the registration fee specified in Part A of the Second Schedule in the manner specified in Part B thereof, within fifteen days of receipt of intimation from the Board;(b)the depository shall comply with the provisions of the Act, the Depositories Ordinance, the bye-laws, agreements and these regulations;(c)the depository shall not carry on any activity other than that of a depository unless the activity is incidental to the activity of the depository:[Provided that a depository may carry out such activity not incidental to its activities as a depository, as may be assigned to the depository by the Central Government or by a regulator in the financial sector, through the establishment of Strategic Business Unit(s) specific to each activity with the prior approval of the Board and subject to such conditions as may be prescribed by the Board, including transfer of such activity to a separate company within such time as may be specified by the Board, having regard to the matters which are relevant to the efficient and orderly function of the depository as mentioned in regulation 13.Explanation.- For the purposes of this clause, a Strategic Business Unit shall be an organizational unit of a company with its own mission, objectives and business strategy that is given the responsibility to serve the particular demands of one business area with appropriate technological, financial and other segregations.] [Inserted by Notification No. 11/LC/GN/2007/4485, dated 10.10.2007](d)[ the sponsor shall, at all times, hold at least fifty one per cent. of the equity share capital of the depository.] [Substituted by Notification No. 11/LAD/GN/2008/20494, dated 17.3.2008](e)no participant shall at any time, hold more than five per cent of the equity capital of the depository;(ea)[ no person other than a sponsor, whether resident in India or not, shall at any time, either individually or together with persons acting in concert, hold more than five per cent. of the equity share capital in the depository. [Substituted by Notification No. 11/LAD/GN/2008/20494, dated 17.3.2008]Explanation:- For the purposes of this clause,-(i)the expression "person resident in India" shall have the meaning assigned to it in clause (v) of section 2 of the Foreign Exchange Management Act, 1999 (42 of 1999);(ii)the expression "persons acting in concert" shall have the meaning derived from clause (e) of subregulation (1) of regulation 2 of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997;(eb)The combined holding of all persons resident outside India in the equity share capital of the depository shall not exceed, at any time, forty-nine per cent. of its total equity share capital, subject further to the following:(i)the combined holdings of such persons acquired through the foreign direct investment route is not more than twenty six per cent. of the total equity share capital, at any time;(ii)the combined holdings of foreign institutional investors is not more than twenty three per cent. of the total equity share capital, at any time;(iii)no foreign institutional investor acquires shares of the depositories otherwise than through the secondary market;(ec)no foreign institutional investor shall have any representation in the board of Directors of the depository;](f)if any information previously submitted by the depository or the sponsor to the Board is found to be false or misleading in any material particular, or if there is any change in such information, the depository shall forthwith inform the Board in writing;(g)the depository shall redress the grievances of the participants and the beneficial owners within thirty days of the date of receipt of any complaint from a participant or a beneficial owner and keep the Board informed about the number and the nature of redressals;(h)the depository shall make an application for commencement of business under regulation 14 within one year from the date of grant of certificate of registration under this regulation; and(i)the depository shall amend its bye-laws from time to time as may be directed by the Board.
