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CHAPTER VI
MISCELLANEOUS 22. Cognizance of offences by courts
(1) NO court shall take cognizance of any offence punishable under this Act or any regulations or bye-laws made thereunder, save on a complaint made by the Board. (2) No court inferior to that of a Metropolitan Magistrate or a Judicial Magistrate of the first class shall try any offence punishable under this Act. 23. Appeals
(1) Any person aggrieved by an order of the Board made under this Act, or the regulations made thereunder may prefer an appeal to the Central Government within such time as may be prescribed. (2) No appeal shall be admitted if it is preferred after the expiry of the period prescribed therefor; Provided that an appeal may be admitted after the expiry of the period prescribed therefor if the appellant satisfies the Central Government that he had sufficient cause for not preferring the appeal within the prescribed period. (3) Every appeal made under this section shall be made in such form and shall be accompanied by a copy of the order appealed against and by such fees as may be prescribed. (4) The procedure for disposing of an appeal shall be such as may be prescribed. Provided that before disposing of an appeal the appellant shall be given a reasonable opportunity of being heard. 24. Power of Central Government to make rules
(1) The Central Government may, by notification in the Official Gazette, make rules for carrying out the provisions of this Act. (2) In particular, and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters, namely:- (a) the time within which an appeal may be preferred under sub-section (1) of section 23; (b) the form in which an appeal may be preferred under sub-section (3) of section 23 and the fees payable in respect of such appeal; (c) the procedure for disposing of an appeal under sub-section (4) of section 23. 25. Power of Board to make regulations
(1) Without prejudice to the provisions contained in section 30 of the Securities and Exchange Board of India Act, 1992, the Board may, by notification in the Official Gazette, make regulations consistent with the provision of this Act and the rules made thereunder to carry out the purposes of this Act. (2) In particular, and without prejudice to the generality of the foregoing power, such regulations may provide for - (a) the form in which record is to be maintained under clause (i) of sub-section (1) of section 2; (b) the form in which the certificate of commencement of business shall be issued under sub-section (2) of section 3; (c) the manner in which the certificate of security shall be surrendered under sub-section (1) of section 6; (d) the manner of creating a pledge or hypothecation in respect of security owned by a beneficial owner under sub-section (1) of section 12; (e) the conditions and the fees payable with respect to the issue of certificate of securities under sub- section (3) of section 14; (f) the rights and obligations of the depositories, participants and the issuers under sub-section (1) of section 17; (g) the eligibility criteria for admission of securities in the depository under sub-section (2) of section 17. 26. Power of depositories to make bye-laws
(1) A depository shall, with the previous approval of the Board, make bye-laws consistent with the provisions of this Act and the regulations. (2) In particular, and without prejudice to the generality of the foregoing power, such bye-laws shall provide for - (a) the eligibility criteria for admission and removal of securities in the depository; (b) the conditions subject to which the securities shall be dealt with; (c) the eligibility criteria for admission of any person as a participant; (d) the manner and procedure for dematerialisation of securities; (e) the procedure for transactions within the depository; (f) the manner in which securities shall be dealt with or withdrawn from a depository; (g) the procedure for ensuring safeguards to protect the interests of participants and beneficial owners; (h) the conditions of admission into and withdrawal from a participant by a beneficial owner; (i) the procedure for conveying information to the participants and beneficial owners on dividend declaration, shareholder meetings and other matters of interest to the beneficial owners; (j) the manner of distribution of dividends, interest and monetary benefits received from the company among beneficial owners; (k) the manner of creating pledge or hypothecation in respect of securities held with a depository; (l) inter se rights and obligations among the depository, issuer, participants and beneficial owners; (m) the manner and the periodicity of furnishing information to the Board, issuer and other persons; (n) the procedure for resolving disputes involving depository, issuer, company or a beneficial owner; (o) the procedure for proceeding against the participant committing breach of the regulations and provisions for suspension and expulsion of participants from the depository and cancellation of agreements entered with the depository; (p) the internal control standards including procedure for auditing, reviewing and monitoring. (3) Where the Board considers it expedient so to do, it may, by order in writing, direct a depository to make any bey- laws or to amend or revoke any bye-laws already made within such period as it may specify in this behalf. (4) If the depository fails or neglects to comply with such order within the specified period, the Board may make the bye-laws or amend or revoke the bye-laws made either in the form specified in the order or with such modifications thereof as the Board thinks fit. 27. Rules and regulations to be laid before Parliament
Every rule and every regulation made under this Act shall be laid, as soon as may be after it is made, before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the rule or regulation or both Houses agree that the rule or regulation should not be made, the rule or regulation shall thereafter have effect only in such modified form or be of no effect, as the case may be, so however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule or regulation. 28. Application of other laws not barred
The provisions of this Act shall be in addition to, and not in derogation of, any other law for the time being in force relating to the holding and transfer of securities. 29. Removal of difficulties
(1) If any difficulty arises in giving effect to the provisions of this Act, the Central Government may, by order published in the Official Gazette, make such provisions not inconsistent with the provisions of this Act as appear to it to be necessary or expedient for removing the difficulty: Provided that no order shall be made under this section after the expiry of a period of two years from the commencement of this Act. (2) Every order made under this section shall be laid, as soon as may be after it is made, before each House of Parliament. 30. Amendments to certain enactments - The enactments specified in the Schedule to this Act shall be amended in the manner provided therein. 31. Repeal and saving
(1) The Depositories (Third) Ordinance, 1996 is hereby repealed. (2) Notwithstanding such appeal, anything done or any action taken under the said Ordinance shall be deemed to have been done or taken under the corresponding provisions of this Act. |
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THE SCHEDULE AMENDMENTS
TO CERTAIN ENACTMENTS Securities not liable to stamp duty
`8A. Notwithstanding anything contained in this Act,- (a) an issuer, by the issue of securities to one or more depositories shall, in respect of such issue, be chargeable with duty on the total amount of security issued by it and such securities need not be stamped; (b) where an issuer issues certificate of security under sub-section (3) of section 14 of the Depositories Act, 1996, on such certificate duty shall be payable as is payable on the issue of duplicate certificate under this Act; (c) transfer of registered ownership of shares from a person to a depository or from a depository to a beneficial owner shall not be liable to any stamp duty; (d) transfer of beneficial ownership of shares, such shares being shares of a company dealt with by a depository shall not be liable to duty under article 62 of Schedule I of this Act. Explanation -
AMENDMENTS TO CERTAIN ENACTMENTS
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PART II AMENDMENTS TO THE COMPANIES ACT 1956 (1 of 1956) AMENDMENTS 1. In section 2, after clause (45A), the following clause shall be inserted, namely:- `(45B) "Securities and Exchange Board of India" means the Securities and Exchange Board of India established under section 3 of the Securities and Exchange Board of India Act, 1992.' 2. Interpretation of certain words and
expressions
After section 2, the following section shall be inserted, namely:- "2A. Words and expressions used and not defined in this Act but defined in the Depositories Act, 1996 shall have the same meanings respectively assigned to them in that Act". 3. In section 41, after sub-section (2), the following sub- section shall be inserted, namely:- "(3) Every person holding equity share capital of company and whose name is entered as beneficial owner in the records of the depository shall be deemed to be a member of the concerned company." 4. In section 49, in sub-section (5), after clause (b), the following clause shall be inserted, namely:- "(c) from holding investments in the name of a depository when such investment are in the form of securities held by the company as a beneficial owner." 5. In section 51, the following proviso shall be inserted, namely:- "Provided that where the securities are held in a depository, the records of the beneficial ownership may be served by such depository on the company by means of electronic mode or by delivery of floppies or discs. 6. Section 83 shall be omitted. 7. In section 108, after sub-section (2), the following sub- section shall be inserted, namely:- "(3) Nothing contained in this section shall apply to transfer of security effected by the transferor and the transferee both of whom are entered as beneficial owners in the records of a depository." 8. In section 111, after sub-section (13), the following sub- section shall be inserted, namely:- `(14) In this section "company" means a private company and includes a private company which had become a public company by virtue of section 43A of this Act.' 9. Rectification of register on
transfer
After section 111, the following section shall be inserted, namely:- `111A. (1) In this section, unless the context otherwise requires, "company" means a company other than a company referred to in sub-section (14) of section 111 of this Act. (2) Subject to the provisions of this section, the shares or debentures and any interest therein of a company shall be freely transferable. (3) The Company Law Board may, on an application made by a depository, company, participant or investors or the Securities and Exchange Board of India within two months from the date of transfer of any shares or debentures held by a depository or from the date on which the instrument of transfer or the intimation of transmissions was delivered to the company, as the case may be, after such enquiry as it thinks fit, direct any company or depository to rectify register or records if the transfer of the shares or debentures is in contravention of any of the provisions of the Securities and Exchange Board of India Act, 1992 or regulations made thereunder or the Sick Industrial Companies (Special Provisions) Act, 1985. (4) The Company Law Board while acting under sub-section (3), may at its discretion make such interim order as to suspend the voting rights before making or completing such enquiry. (5) The provisions of this section shall not restrict the right of a holder of shares or debentures, to transfer such shares or debentures and any person acquiring such shares or debentures shall be entitled to voting rights unless, the voting rights have been suspended by an order of the Company Law Board. (6) Notwithstanding anything contained in this section, any further transfer, during the pendency of the application with the Company Law Board, of shares or debentures shall entitle the transferee to voting rights unless the voting rights in respect of such transferee have also been suspended. (7) The provisions of sub-sections (5), (7), (9), (10) and (12) of section 111 shall, so far as may be, apply to the proceedings before the Company Law Board under this section as they apply to the proceedings under that section'. 10. In section 113, after sub-section (3), the following sub- section shall be inserted, namely:- "(4) Notwithstanding anything contained in sub-section (1), where the securities are dealt with in a depository, the company shall intimate the details of allotment of securities to depository immediately on allotment of such securities". 11. In section 150, in sub-section (1), in clause (b), the words "distinguishing each share by its number" shall be omitted. 12. In section 152, in sub-section (1), in clause (b), the words "distinguishing each debenture by its number" shall be omitted. 13. After section 152, the following section shall be inserted, namely:- "152A. Register and index of beneficial owners. - The register and index of beneficial owners maintained by a depository under section 11 of the Depositories Act, 1996, shall be deemed to be an index of members and register and index of debenture holders, as the case may be, for the purposes of this Act." 14. In Schedule II, in Part II, in clause C, after sub-clause 9, the following sub-clause shall be inserted, namely:- "9A. The details of opinion to subscribe for securities to be dealt with in a depository".
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