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: The Act aims to make securities freely transferable, dematerialize securities, and maintain ownership records in a book-entry form.

Rights and Obligations of Depositories

An entity intending to act as a depository participant should enter into an agreement with the depository in the prescribed format.
Every depository shall register the transfer of security in the name of the transferee on receipt of intimation from a participant.
Beneficial owners have the option to receive or hold securities certificates with a depository.
All securities held by a depository shall be dematerialized and in fungible form.
The depository shall inform the issuer about the transfer of securities in the name of beneficial owners at prescribed intervals.
The depository shall be deemed to be the registered owner for the purpose of effecting transfer of ownership of security on behalf of a beneficial owner.

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.
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.
SEBI can issue directions to the depository or participant or any person associated with the securities market after making or causing to be made an enquiry.

Failure to furnish information or books or documents or reports by the depository or the depository participant will carry 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.
Failure to maintain books of account or records will carry 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.
Failure to enter into an agreement either by an intermediary or any issuer will carry 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.

Composition of Certain 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 the SEBI made under this Act or the regulations made thereunder may prefer an appeal to the Central Government or the Securities Appellate Tribunal (SAT).