On 03.10.2018, SEBI issued new regulations for depositories & participants by the name of SEBI (Depositories & Participation) Regulations, 2018 (DP regulations, 2018) repealing all the erstwhile regulations. However, earlier circulars, guidelines etc. issued under previous regulations are still applicable.
As per these regulations, various obligations are cast on the issuer i.e. enter into an agreement with depository, tripartite agreement in case of appointment of RTA, handling share registry work, redress grievances of beneficial owners within 30 days, reconciliation of records of dematerialized securities on daily basis, Quarterly submission of audit report, establishment of continuous electronic means of communication with the depository etc. Further, RTA shares some of the obligations of issuer i.e. handling share registry work, redressal of investor grievances, reconciliation of records of dematerialized securities and establishment of continuous electronic means of communication with the depository.
Further, on 23.01.2019, SEBI issued some clarifications regarding the DP regulations, 2018.
With regard to Regulation 24(9) & regulation 24 (10)
Regulation 24(9) provides that no depository participant or their associates and agents, irrespective of the depository of which they are members, shall be on the governing board of a depository.
Regulation 24(10) provides that a person who is a director in an entity, that itself is a depository participant or has associate(s) as depository participant, he/she will be deemed to be a depository participant.
Here, SEBI clarified that a recognized clearing corporation shall not be considered as a DP. Further, in addition to the directors, employers, employees of the entities mentioned in Regulation 24(10) shall not be considered as DP or their associate.
Finally, SEBI directed all the depositories to implement the circular, disseminate the same on their website & communicate to SEBI the status of implementation of the provisions of this circular through monthly development report.
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