SEBI (Depository Participant Regulations), 1996

Narendra Kumar

30 May, 2019

About It?

Sebi It is an institution which holds Securities or scrip’s with it, in which trading is done in electronic form at the request of the investor through a registered Depository Participant. The intermediaries are Depository Participants who do it on behalf of the clients or investors. These DP’s needs to get registered with Depositories in context to operate along with a SEBI License.

There are 2 depositories in India:

• NSDL
• CDSL

An investor has to open a Depository Account with the DP’s for assigning securities & thereby trading in the same. It just like a Bank which keeps securities rather than Cash. It holds a fund for investors.

Services Provided by a Depository?

• Dematerialization i.e. conversion of physical share certificate into electronic form.
• Rematerialization i.e. reverse of the above.
• Transfer of securities
• Change in beneficial ownership
• Settlement of trades
• Corporate action benefits to the DP Accounts
• Pledging & Unpledging of securities.
• Services related to the transaction of securities.
• Maintaining record of securities
• Settlement of off-market transactions

Net Worth?

• 100 Crore

What is Depository Participant?

Depositories Participants are agents of Depository. They act as an intermediary between Depository & Investors. It is affected by an agreement between both of them set out all essential clauses of service. A Depository Participant has to be registered with SEBI under the relevant regulations. They can be the following entities

• Public Financial Institutions
• Scheduled Commercial Banks
• Foreign Banks operating in India
• Custodians
• Stock-brokers
• Clearing Corporations / Houses
• NBFC’s
• Registrar to issue or Company Share Transfer agents

Benefits of the dematerialized shares are given to the investor concerned as they hold the securities in a fiduciary capacity on behalf of the investor who has opted to open the account. Hence, they are Beneficial Owners of securities. A Total of 866 DP’s are registered with SEBI.

Application?

• An application for grant of a certificate shall be made to Board in Form E, who proposes to act as a participant shall be accompanied by a non – refundable fees.
• The Board shall account all matters which are relevant to the functioning of a participant while considering the application.
• The applicant is a fit & proper person.
• Grant is in the interest of investors.
• the applicant is eligible to be admitted as a participant of the depository through which it has made the application to the Board
• the applicant has adequate infrastructure, systems, safeguards and trained staff to carry on activity as a participant;

*Finally, if the Board is satisfied with the eligibility it will grant the Certificate in Form F.

The Initial registration shall be valid for a period of 5 years. They shall abide by the Code of Conduct specified in schedule III.

 Documentation:

*All the documents should be attested as the true copy by an authorized notary.

 Names, the address of registered office, telephone, fax no. of the applicant along with the name of the contact person.

• Date & Place of incorporation & date of commencement of business i.e. COI, MOA & AOA of the company.
• Details of activity carried on by an applicant in India & Overseas.
• Details of affiliates, subsidiaries operating in India, with activities carried on by them.
• Details of Registration of Underwriters with SEBI, RBI or other regulatory authorities obtained before.
• Type & No. of Beneficial’s Owners on whose behalf applicant proposes to act as a participant.
• Name & SEBI Registration No. of the Depository in which applicant is a participant.
• Net worth & Paid-up Capital disclosure in Rupees as per the latest audited financial statement.
• Details of Staff involved in the activity to be conducted i.e. Organization Structure, Experience & background of key personnel.
• Details of safe-keeping & security systems deployed i.e. internal control mechanism & risk operations control.
• Details of Insurance cover to be taken up.
• Details of automatic data processing & record keeping
• Declaration or disclosure regarding applicant’s shareholding or whether it is proposed to be acquired.
• Undertaking from the depository in which the applicant is to act as a participant.
• Declaration Statement.

  Fees:

• Application Fees by Depository: 500000
• Application Fees payable by participant: 15000
• Registration Fees payable by a Depository: 10000000
• Registration Fees payable by a Participant: 200000
• Annual Fees payable by Depository: 5000000
• Annual Fees payable by Participant: 1000