THE DEPOSITORIES ACT, 1996

The act provides for the regulation of depositories in securities and matters connected there with.
The act provides for registration of depositories from the Securities and Exchange Board of India (Board). Before obtaining the registration certificate, the depository has to satisfy the Board that it has adequate systems and safeguards to prevent manipulations of records and transactions.
A depository shall enter into an agreement with one or more Participants as its agent. A person can enter into an agreement with a Depository through a Participant to avail the services of the Depository. The person who has entered into an agreement with the depository shall surrender the certificate of security to the issuer who in turn shall cancel the certificate of security and substitute in its records the name of the depository as the registered owner and inform the depository accordingly. The depository shall thereafter, enter the name of the person who had the surrendered the certificate of security as the beneficial owner in its records.
Every depository shall, on receipt of intimation from a participant, register the transfer of security in the name of the transferee. All securities held by a depository shall be dematerialised and shall be in a fungible form.
The depository shall be deemed to be the registered owner for the purposes of effecting transfer of ownership of security on behalf of a beneficial owner. The beneficial owner shall be entitled to all the rights and benefits and be subjected to all the liabilities in respect of his securities held by a depository.
A beneficial owner may with the previous approval of the depository create a pledge or hypothecation in respect of a security owned by him through a depository.
If a beneficial owner seeks to opt out of a depository in respect of any security he shall inform the depository accordingly. The depository shall on receipt of intimation make appropriate entries in its records and shall inform the issuer.
Any loss caused to the beneficial owner due to the negligence of the depository or the participant, the depository shall indemnify such beneficial owner. Where the loss due to the negligence of the participant is indemnified by the depository, the depository shall have the right to recover the same from such participant.
The Board has power to call for information and enquiry from any issuer, depository, participant or beneficial owner with respect to any security. Further the Board has the power to issue directions to any person associated with the securities market.
Penalties are imposed under section 19A to G for failure of performance or contravention of orders, direction etc of the Board by various players in the security market. Adjudicating officers adjudge the penalties.
Section 20 of the act provides for punishment for various offences. Only sessions courts can try an offence under this act. Section 22A deals with composition of offences and section 22B deals with immunities.
Appeals against the order of Board or adjudicating officers shall lie to Securities Appellate Tribunal. The act ousts the powers of civil court with respect to matters empowered to the Securities Appellate Tribunal. Any person aggrieved by any decision or order of the Securities Appellate Tribunal may file an appeal to the Supreme Court within sixty days from the date of communication of the decision or order.
Depository shall, with the previous approval of the Board, make bye-laws consistent with the provisions of the Act and the regulations.