SEBI Depositories Act, 1996

Introduction: The Depositories Act, 1996 provides for the establishment of depositories in securities to ensure free transferability of securities with speed, accuracy, and security.
Key Objectives:
- Making securities freely transferable subject to certain exceptions
- Dematerialization of securities in the depository mode
- Providing for the maintenance of ownership records in a book-entry form

Rights and Obligations of Depositories

Agreement: An entity intending to act as a depository participant should enter into an agreement with the Depository in the prescribed format.
Registration: Every depository shall register the transfer of security in the name of the transferee.
Dematerialization: All securities held by a depository shall be dematerialized and shall be in fungible form.
Beneficial Owner: The beneficial owner shall be entitled to all rights and benefits and be subjected to all the liabilities in respect of his securities held by a depository.

SEBI Powers: SEBI may call upon any issuer, depository, depository participant, or beneficial owner to furnish information in writing relating to the securities held in a depository.
Inspection: SEBI may require or authorize any person to make an enquiry or inspection in relation to the affairs of the issuer, beneficial owner, depository participant.

Failure to Furnish Information: Failure to furnish any information, document, books, returns, or report to SEBI shall make a person liable to a penalty which shall not be less than one lakh rupees but which may extend to one lakh rupees for each day during which such failure continues subject to a maximum of one crore rupees.
Other Penalties: Penalties are also imposed for failure to maintain books of account or records, failure to enter into an agreement, failure to address investors' grievances, and delay in dematerialization or issue of a certificate of securities.

Composition of Offences: Any offence punishable under this Act may be compounded by the Securities Appellate Tribunal (SAT) or a court before which such proceedings are pending.
Power to Grant Immunity: The Central Government may grant immunity from prosecution or penalty to a person who has made full and true disclosure of the alleged violation.
Appeals: Any person aggrieved by an order of SEBI may prefer an appeal to the Central Government or the Securities Appellate Tribunal (SAT), and further appeal to the Supreme Court.