Securities and Exchange Board of India (Depositories and Participants) Regulations 2018 [Last amended on November 22, 2025]

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Page 1 of 85 THE GAZETTE OF INDIA EXTRAORDINARY PART III - SECTION 4 PUBLISHED BY AUTHORITY NEW DELHI, OCTOBER 03, 2018 SECURITIES AND EXCHANGE BOARD OF INDIA NOTIFICATION Mumbai, the 3rd October, 2018 SECURITIES AND EXCHANGE BOARD OF INDIA (DEPOSITORIES AND PARTICIPANTS) REGULATIONS, 2018 No. SEBI/LAD-NRO/GN/2018/40.- In exercise of the powers conferred by section 30 of the Securities and Exchange Board of India Act, 1992 (15 of 1992) read with section 25 of the Depositories Act, 1996 (22 of 1996), the Securities and Exchange Board of India hereby makes the following regulations, namely: CHAPTER I PRELIMINARY Short title and commencement 1. (1) These regulations may be called the Securities and Exchange Board of India (Depositories and Participants) Regulations, 2018. (2) They shall come into force on the date of their publication in the Official Gazette. Definitions 2. (1) In these regulations, unless the context otherwise requires, the terms used in these regulations shall bear the meanings assigned to them below, and their cognate expressions shall be construed accordingly,- (a) “Act” means the Securities and Exchange Board of India Act, 1992 (15 of 1992); (b) “applicant” means any person or persons who, acting alone or in combination with another person proposes to establish a depository under these regulations and holds fifteen percent shareholding of the depository; Page 2 of 85 (c) "associate" shall have the same meaning as assigned to it under clause (b) of sub- regulation (1) of regulation 2 of the Securities Contracts (Regulation) (Stock Exchanges and Clearing Corportions) Regulations, 2018 or any amendments thereof; (d) "Board" means the Securities and Exchange Board of India established under section 3 of the Securities and Exchange Board of India Act, 1992 (15 of 1992); 1[(e) ““Change in control” – (i) in case of a body corporate – (A) if its shares are listed on any recognised stock exchange, shall be construed with reference to the definition of control in terms of regulations framed under clause (h) of sub-section (2) of section 11 of the Act; (B) if its shares are not listed on any recognised stock exchange, shall be construed with reference to the definition of control as provided in sub-section (27) of Section 2 of the Companies Act, 2013 (18 of 2013); (ii) in a case other than that of a body corporate, shall be construed as any change in its legal formation or ownership or change in controlling interest. Explanation – For the purpose of sub-clause (ii), the expression “controlling interest” means an interest, direct or indirect, to the extent of not less than fifty percent of voting rights or interest;] 2[***] (g) “Depositories Act” means the Depositories Act, 1996 (22 of 1996); (h) “form” means any of the forms specified in the First Schedule; (i) "governing board” means the board of directors of a depository; (j) “inspecting officer” means any person authorised by the Board under regulation 84; 3[(k) “key management personnel” shall include: 1 Substituted by the Securities and Exchange Board of India (Change in Control in Intermediaries) (Amendment) Regulations, 2023 w.e.f. 17-1-2023. Prior to the substitution, clause (e) read as under: ““change in control” – (i) in case of a body corporate – (A) if its shares are listed on any recognised stock exchange, shall be construed with reference to the definition of control in terms of regulations framed under clause (h) of sub-section (2) of section 11 of the Act; (B) in any other case, shall be construed as change in the controlling interest in the body corporate; Explanation: For the purpose of para (B) of this sub-clause, the expression “controlling interest” means an interest, whether direct or indirect, to the extent of at least fifty-one percent of voting rights in the body corporate; (ii) in a case other than that of a body corporate, shall be construed as any change in its legal formation or ownership.” 2 Clause (f) omitted by the Securities and Exchange Board of India (Change in Control in Intermediaries) (Amendment) Regulations, 2023 w.e.f. 17-1-2023. 3 Substituted by the Securities and Exchange Board of India (Depositories and Participants) (Amendment) Regulations, 2023, w.e.f. 28-08-2023. Prior to its substitution, clause (k) read as under: “(k) "key management personnel" would include a person serving as head of any department, or in such senior executive position that stands higher in hierarchy to the head(s) of the department(s) in the depository, or any person who directly reports to chief executive officer or to the director of the governing board of the Page 3 of 85 i. any person appointed as the managing director or executive director; or ii. a person serving as head of any department or vertical and directly reports to the managing director or to the directors on the governing board of the depository; or iii. a person serving as head of a core function as specified under Fourth Schedule of these regulations; or iv. a person who stands higher in hierarchy to the head of any department(s) handling core function(s) in the depository; or v. reporting officials of key management personnel; or vi. any person defined as a “key managerial personnel” under the Companies Act, 2013; or vii. any other person who is key decision making authority at the level of the depository or its direct or indirect material subsidiaries, as identified by the managing director or its Nomination and Remuneration Committee: Provided that in the case of a subsidiary of a depository that is regulated by a financial sector regulator; the norms specified by such a regulator may be considered for determining as to whether the person at the subsidiary is designated as a key management personnel.] 4[(ka) “non-independent director" means a director elected or nominated by the shareholders who are neither depository participants nor their associates and agents;] (l) "persons acting in concert" in the context of acquisition or holding of shares or voting rights or control shall mutatis mutandis have the same meaning as assigned to it in clause (q) of sub-regulation (1) of regulation 2 of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 or any amendments thereof; (m) "public interest director" means an independent director representing the interests of investors in securities market and who is not having any association, directly or indirectly, which in the opinion of the Board, is in conflict with his role; (n) "regulatory department" means a department of a depository which is entrusted with regulatory powers and duties and includes such department as may be specified by the Board;" (o) “Schedule” means any of the Schedules annexed to these regulations; 5[***] depository, or any person upto two levels below the chief executive officer or managing director, or any other person as may be identified by its Nomination and Remuneration Committee;” 4 Inserted by the Securities and Exchange Board of India (Depositories and Participants) (Amendment) Regulations, 2023, w.e.f. 28-08-2023. 5 Omitted by the Securities and Exchange Board of India (Depositories and Participants) (Amendment) Regulations, 2023, w.e.f. 28-08-2023. Prior to its omission, clause (p) read as under: “(p) "shareholder director" means a director who represents the interest of shareholders, and elected or nominated by such shareholders who are not depository participants, or their associates and agents;” Page 4 of 85 (2) Words and expressions used and not defined in these regulations but defined in the Act, the Securities Contracts (Regulation) Act, 1956, the Depositories Act, 1996, the Companies Act, 2013 or any rules or regulations made thereunder shall have the same meanings respectively assigned to them in those Acts, rules or regulations made thereunder or any statutory modification or re-enactment thereto, as the case may be. CHAPTER II REGISTRATION OF DEPOSITORY Application for grant of certificate of registration 3. (1) No person shall establish a Depository unless he has obtained registration from the Board in accordance with the Act, the Depositories Act, 1996 and these regulations. (2) An application for the grant of a certificate of registration as a depository shall be made to the Board by an applicant in Form A of the First Schedule, shall be accompanied by the fee specified in Part A of the Second Schedule and be paid in the manner specified in Part B thereof. (3) The application shall be accompanied by draft bye-laws of the depository that is proposed to be set-up. Application to conform to the requirements 4. An application in Form A of the First Schedule which is not complete in all respects and does not conform to the instructions specified therein shall be rejected: Provided that before rejecting any such application, the applicant shall be given in writing an opportunity to remove, within thirty days of the date of communication in this regard, the objections indicated by the Board: Provided further that the Board may, on being satisfied that it is necessary to extend the period specified in the first proviso, extend such period by such further time as it thinks necessary in order to enable the applicant to remove the objections indicated by the Board. Furnishing of information, clarification and personal representation 5. (1) The Board may require the applicant to furnish such further information or clarification regarding matters relevant to the activity of the depository for the purpose of consideration of the application. (2) The applicant or his authorised representative shall, if so required, appear before the Board for personal representation, in connection with the grant of certificate of registration. Consideration of application for grant of certificate of registration 6. (1) The Board shall not consider an application under regulation 3, unless the applicant belongs to the category of shareholders eligible to hold upto 15% share capital of the depository in terms of sub-regulation (1) and (2) of regulation 21. Page 5 of 85 (2) The Board shall not consider an application under regulation 3, unless the applicant is a fit and proper person as described in sub-regulation 2 of regulation 23. Grant of certificate of registration 7. After considering the application under regulation 3, with reference to the qualifications specified in regulation 6, if the Board is satisfied that the company established by the applicant is eligible to act as depository, it may grant a certificate of registration in Form B of the First Schedule to the depository subject to the following, namely :— (a) the depository shall pay the registration fee specified in Part A of the Second Schedule in the manner specified in Part B thereof, within fifteen days of receipt of intimation from the Board; (b) the depository shall comply with the provisions of the Act, the Depositories Act, the bye-laws, agreements and these regulations ; (c) 6[(i)] the depository shall not carry on any activity whether involving deployment of funds or otherwise without prior approval of the Board: Provided that prior approval of the Board shall not be required in case of treasury investments if such investments are as per the investment policy approved by the governing board of depository. Provided further that a depository may carry out such activity not incidental to its activities as a depository, whether involving deployment of funds or otherwise, as may be assigned to the depository by the Central Government or by a regulator in the financial sector, through the establishment of Strategic Business Unit(s) specific to each activity with the prior approval of the Board and subject to such conditions as may be prescribed by the Board, including transfer of such activity to a separate company within such time as may be specified by the Board having regard to the matters which are relevant to the efficient and orderly function of the Depository as mentioned in regulation 14. Explanation: For the purposes of this clause, a Strategic Business Unit shall be an organizational unit of a company with its own mission, objectives and business strategy that is given the responsibility to serve the particular demands of one business area with appropriate technological, financial and other segregations. 7[(ii) An employee of a depository shall not simultaneously be an employee of any other company where the depository has invested. (iii) A director, committee member or employee of a depository shall not receive any compensation or any other financial benefit from the companies where the depository has invested, other than fees and expenses related to the governing board and committee meetings.] 6 Renumbered as (i) by the Securities and Exchange Board of India (Depositories and Participants) (Amendment) Regulations, 2023, w.e.f. 28-08-2023. 7 Inserted by the Securities and Exchange Board of India (Depositories and Participants) (Amendment) Regulations, 2023, w.e.f. 28-08-2023. Page 6 of 85 (d) the shareholding of the applicant in the depository shall be locked-in for a period of five years from the date of grant of registration by the Board. (e) the depository complies with the shareholding and governance structure requirements specified in these regulations; (f) if any information previously submitted by the depository or the applicant to the Board is found to be false or misleading in any material particular, or if there is any change in such information, the depository shall forthwith inform the Board in writing; (g) the depository shall redress the grievances of the participants and the beneficial owners within 8[twenty-one calendar days] of the date of receipt of any complaint from a participant or a beneficial owner and keep the Board informed about the number and the nature of redressals; (h) the depository shall make an application for commencement of business under regulation 11 within one year from the date of grant of certificate of registration under this regulation; and (i) the depository shall amend its bye-laws from time to time as may be directed by the Board; (j) any other condition as the Board may deem fit in the interest of securities market. Payment of annual fee 8. A depository who has been granted a certificate of registration under regulation 7, shall pay 9[, within fifteen days from the beginning of each financial year, the] annual fee specified in Part A of the Second Schedule in the manner specified in Part B thereof. 10[Payment of annual charge 9. 11[(1)] A depository shall, within fifteen days from the end of each month, pay as provided in Part A of the Second Schedule, a percentage of the annual custody charges received by it from the issuers during the month, to the Board in the manner provided in Part B thereof.] 12[(2) The details of remittance shall be forwarded along with the statement of computation of annual charges certified to be correct by a chartered accountant.] 8 Substituted for “thirty days” by the Securities and Exchange Board of India (Facilitation of Grievance Redressal Mechanism) (Amendment) Regulations, 2023 w.e.f. 18-08-2023. 9 Inserted by the Securities and Exchange Board of India (Depositories and Participants) (Amendment) Regulations, 2025, w.e.f. 01.04.2025. 10 Substituted by the Securities and Exchange Board of India (Depositories and Participants) (Amendment) Regulations, 2024, w.e.f. 10-05-2024. Prior to substitution, regulation 9 read as under: “Payment of annual charge 9. A depository shall pay to the Board, a percentage of the annual custody charges collected by it from the issuers as specified in Part A of Second Schedule in the manner specified in Part B thereof.” 11 The existing provision renumbered as sub-regulation (1) by the Securities and Exchange Board of India (Depositories and Participants) (Amendment) Regulations, 2025, w.e.f. 01.04.2025. 12 Inserted by the Securities and Exchange Board of India (Depositories and Participants) (Amendment) Regulations, 2025, w.e.f. 01.04.2025. Page 7 of 85 13[ Interest on non-payment, belated payment or short payment of annual fee and annual charge. 9A. Where due to the default of the depository, any fee which was liable to be paid to the Board under Regulation 8 and Regulation 9 remains unpaid or is paid belatedly or is short-paid by the depository, it shall, without prejudice to any other action that may be initiated under the Act, rules or regulations, pay an interest of fifteen per cent per annum on the amount remaining unpaid or belatedly paid or short-paid, for every month of delay or part thereof to the Board.] Procedure where certificate of registration is not granted 10. (1) Where an application for the grant of certificate of registration under regulation 3 does not satisfy the requirements specified in regulation 7, the Board shall reject the application after giving the applicant an opportunity of being heard. (2) The decision of the Board to reject the application shall be communicated to the applicant in writing within thirty days of such decision, stating therein the grounds on which the application has been rejected. CHAPTER III CERTIFICATE OF COMMENCEMENT OF BUSINESS Application for grant of certificate of commencement of business 11. A depository which has been granted a certificate of registration under regulation 7, shall within one year from the date of issue of such certificate make an application to the Board for commencement of business in Form C of the First Schedule. Application to conform to the requirements 12. Any application in Form C of the First Schedule which is not complete in all respects and does not conform to instructions specified therein shall be rejected: Provided that before rejecting any such application, the applicant shall be given in writing an opportunity to remove within thirty days of the date of communication in this regard, the objections indicated by the Board: Provided further that the Board may, on being satisfied that it is necessary to extend the period specified in the first proviso, extend such period by such further time as it thinks necessary in order to enable the applicant to remove the objections indicated by the Board. Furnishing of information, clarification and personal representation 13. (1) The Board may require the depository to furnish such further information or clarification regarding matters relevant for the grant of certificate of commencement of business. 13 Inserted by the Securities and Exchange Board of India (Depositories and Participants) (Amendment) Regulations, 2025, w.e.f. 01.04.2025. Page 8 of 85 (2) The depository or its authorised representative, if so required, shall appear before the Board for personal representation in connection with the grant of certificate of commencement of business. Consideration of application for grant of certificate of commencement of business 14. (1) The Board shall take into account for considering grant of certificate of commencement of business, all matters which are relevant to the efficient and orderly functioning of the depository and in particular, the following, namely, whether— (a) the depository has a net worth of not less than rupees one hundred crores; (b) the bye-laws of the depository have been approved by the Board; (c) the automatic data processing systems of the depository have been protected against unauthorised access, alteration, destruction, disclosure or dissemination of records and data; (d) the network through which continuous electronic means of communications are established between the depository, participants, issuers and issuers’ agents is secure against unauthorised entry or access; (e) the depository has established standard transmission and encryption formats for electronic communications of data between the depository, participants, issuers and issuers’ agents; (f) the physical or electronic access to the premises, facilities, automatic data processing systems, data storage sites and facilities including back up sites and facilities and to the electronic data communication network connecting the depository, participants, issuers and issuers’ agents is controlled, monitored and recorded; (g) the depository has a detailed operations manual explaining all aspects of its functioning, including the interface and method of transmission of information between the depository, issuers, issuers’ agents, participants and beneficial owners; (h) the depository has established adequate procedures and facilities to ensure that its records are protected against loss or destruction and arrangements have been made for maintaining back up facilities at a location different from that of the depository; (i) the depository has made adequate arrangements including insurance for indemnifying the beneficial owners for any loss that may be caused to such beneficial owners by the wrongful act, negligence or default of the depository or its participants or of any employee of the depository or participant; and (j) the grant of certificate of commencement of business is in the interest of investors in the securities market. (2) The Board shall, before granting a certificate of commencement of business under this Chapter make a physical verification of the infrastructure facilities and systems established by the depository. Networth certificate Page 9 of 85 15. (1) Every depository shall maintain networth as specified under regulation 14 (1) (a) at all times and submit an audited networth certificate from the statutory auditor on a yearly basis, by the thirtieth day of September of every year for the preceding financial year. Explanation: For the purposes of this regulation, ‘networth of a depository’ means the aggregate value of paid up equity share capital and free reserves (excluding statutory funds, benefit funds and reserves created out of revaluation) reduced by the investments in businesses, whether related or unrelated, aggregate value of accumulated losses and deferred expenditure not written off, including miscellaneous expenses not written off. (2) Every depository shall within one month of the date of the holding of its annual general meeting, furnish to the Board a copy of its audited balance-sheet and profit and loss account for the preceding financial year. Grant of certificate of commencement of business 16. After considering the application under regulation 14 with reference to the matters specified in sub-regulation (1) of regulation 14 and making physical verification under sub-regulation (2) of that regulation, if the Board is satisfied that the depository is eligible to commence business as a depository, shall grant a certificate of commencement of business in Form D of the First Schedule. Depository to abide by the Code of Conduct 17. The depository holding a certificate of commencement of business shall, at all times, abide by the Code of Conduct as specified in the Part D of the Third Schedule. Procedure where certificate of commencement of business is not granted 18. (1) If the Board, after considering the matters specified in sub-regulation (1) of regulation 14 and making physical verification under sub-regulation (2) of that regulation, is of the opinion that the depository shall not be granted a certificate of commencement of business, it may either— (a) direct the depository to conform to the matters specified in regulation 14; or (b) reject the application after giving the applicant an opportunity of being heard. (2) The decision of the Board to reject the application shall be communicated to the depository in writing within thirty days of such decision, stating therein the grounds on which the application has been rejected. CHAPTER IV OWNERSHIP OF DEPOSITORY Definitions 19. For the purposes of this Chapter: Page 10 of 85 (1) "banking company" shall have the same meaning as assigned to it in clause (c) of section 5 of the Banking Regulation Act, 1949 (10 of 1949); (2) "insurance company" shall have the same meaning as assigned to it in sub-section (8) of section 2 of the Insurance Act, 1938 (4 of 1938); (3) "person resident in India" shall have the same meaning as assigned to it in clause (v) of section 2 of the Foreign Exchange Management Act, 1999 (42 of 1999); (4) "person resident outside India" shall have the same meaning as assigned to it in clause (w) of section 2 of the Foreign Exchange Management Act, 1999 (42 of 1999). (5) “public financial institution” shall have the same meaning as assigned to it in sub-section (72) of section 2 of the Companies Act, 2013 General Conditions 20. (1) Save as otherwise provided in these regulations, the shareholding or voting rights of any person in a depository shall not exceed the limits specified in these regulations at any point of time. (2) For determining the shareholding of any person in a depository as specified in these regulations, any instrument held, owned or controlled, directly or indirectly, by a person that entitles him the voting rights or provides for entitlement to voting rights or equity shares or any other rights over equity shares at any future date, shall also be included: Provided that any equity or rights over equity, arising from such instruments in excess of limit of shareholding specified in this Chapter on the date of commencement of these regulations, shall be reduced to the specified limit within a period of five years or such other period as may be specified by the Board from time to time, from the date of such commencement. Shareholding in a Depository 21. (1) No person resident in India shall at any time, directly or indirectly, either individually or together with persons acting in concert, acquire or hold more than five percent of the paid up equity share capital in a Depository: Provided that,— (i) a stock exchange; (ii) a depository; (iii) a banking company; (iv) an insurance company; and (v) a public financial institution, may acquire or hold, either directly or indirectly, either individually or together with persons acting in concert, upto fifteen percent of the paid up equity share capital of a Depository. Page 11 of 85 (2) No person resident outside India, directly or indirectly, either individually or together with persons acting in concert, shall acquire or hold more than five percent of the paid up equity share capital in a Depository: Provided further that,- (i) a foreign stock exchange; (ii) a foreign depository; (iii) a foreign banking company; (iv) a foreign insurance company; (v) a foreign commodity derivatives exchange; and (vi) a bilateral or multilateral financial institution approved by the Central Government, may acquire or hold, either directly or indirectly, either individually or together with persons acting in concert, upto fifteen percent of the paid up equity share capital of a Depository. Explanation: For the purposes of proviso to sub-regulation (2), the persons referred to in clauses (i) to (vi) shall mean persons recognised/ incorporated outside India. (3) Subject to the limits as otherwise prescribed by the Central Government from time to time, the combined holding of all persons resident outside India in the paid up equity share capital of a depository shall not exceed, at any time, forty-nine percent of its total paid up equity share capital. Eligibility for acquiring or holding shares in a depository 22. (1) No person shall, directly or indirectly, acquire or hold equity shares or voting rights of a depository unless he is a fit and proper person. The depository shall ensure that all its shareholders are fit and proper persons: Provided that such a requirement to ensure that all its shareholders are fit and proper persons shall not be applicable to a 14[***] depository for shareholding of a person who directly or indirectly, acquires or holds less than two percent equity shares or voting rights of such 15[***] depository. (2) 16[***] (3) Any person eligible to acquire or hold more than five percent of the paid up equity share capital under sub-regulation (1) and sub-regulation (2) of regulation 21 may acquire or hold more than five percent of the paid up equity share capital of a depository only if the person has obtained prior approval of the Board. 14 The word “listed” omitted by the SEBI (Depositories and Participants) (Amendment) Regulations, 2021 w.e.f. 13-08-2021. 15 Ibid. 16 Omitted by the SEBI (Depositories and Participants) (Amendment) Regulations, 2021 w.e.f. 13-08-2021. Prior to its omission, it read as – “(2) Any person(s) who acquires equity shares or voting rights, in a depository, directly or indirectly, either individually or together with persons acting in concert, that entitles the person(s) so acquiring to exercise voting rights of two percent upto five percent, shall seek approval of the Board within fifteen days of such acquisition.” Page 12 of 85 (4) The application for seeking approval in terms of 17[***] sub-regulation (3) of this regulation shall be made to the Board in Form E of the First Schedule through the depository concerned. (5) The depository shall verify the declarations/ undertakings given by the shareholders under sub-regulation (4) and forward the application, along with its recommendation for approval of the Board. (6) 18[***] (7) Any person holding two percent or more of the paid up equity share capital in a depository shall file a declaration within fifteen days from the end of every financial year to the depository that he complies with the fit and proper criteria. Monitoring of shareholding limits 22A. The depository shall put in place a monitoring mechanism as specified in Part E of Second Schedule to ensure compliance with the shareholding restrictions prescribed in these regulations at all times. 19 [Requirement and criteria of fit and proper 23(1) (a) The ‘fit and proper person’ criteria shall apply to the applicant, depository, its shareholders, directors and key management personnel at all times. (b)The depository shall ensure that all its shareholders, directors and key management personnel are fit and proper persons at all times. (2) For the purpose of these regulations, an applicant, or a depository shall be deemed to be a fit and proper person, if - (a) such a person has a general reputation and record of fairness and integrity, including but not limited to — (i) financial integrity; 17 The words “sub-regulation (2) or” omitted by the SEBI (Depositories and Participants) (Amendment) Regulations, 2021 w.e.f. 13-08-2021. 18 Omitted by the SEBI (Depositories and Participants) (Amendment) Regulations, 2021 w.e.f. 13-08-2021. Prior to its omission, it read as – “If approval under sub-regulation (2) is not granted by the Board to any person, such person shall forthwith divest his entire shareholding in the depository.” 19 Substituted by the Securities and Exchange Board of India (Depositories and Participants) (Second Amendment) Regulations, 2023 w.e.f . 23-08-2023. Prior to its substitution, regulation 23 read as under: “Requirement of fit and proper 23(1)The depository shall ensure that all its directors and key management personnel are fit and proper persons at all times. (2) For the purpose of determining whether an applicant, depository, its shareholder, director, key management personnel or a participant, is a ‘fit and proper person’ under these regulations, the criteria specified under regulation 20 of Securities Contracts (Regulation) (Stock exchanges and Clearing Corporations) Regulations, 2018, shall be applicable (3) If any question arises on the decision of a depository as to whether a person is fit and proper, the Board’s decision on such question shall be final.” Page 13 of 85 (ii) good reputation and character; and (iii)honesty; (b) such a person has not incurred any of the following disqualifications— (i) conviction of the person by a court for any economic offence or an offence of the securities laws; (ii) an Order for winding up has been passed against the person; (iii) the person has been declared insolvent and has not been discharged; (iv) an Order; restraining, prohibiting or debarring the person from dealing in securities or from accessing the securities market, has been passed by the Board and a period of three years from the date of the expiry of the period specified in the Order has not elapsed; (v) any other Order against the person which has a bearing on the securities market, has been passed by the Board and a period of three years from the date of the Order has not elapsed: Provided that for the purpose of sub-clauses (iv) and (v), any Order passed by the Board against a depository shall not affect the operation of such a depository unless expressly mentioned in the Order. (vi) the Board has initiated recovery proceedings under the Act or the Securities and Exchange Board of India Act, 1992 (15 of 1992) that are pending; (vii) the person is not financially sound or has been categorized as a willful defaulter; and (viii) any other disqualification as may be specified by the Board from time to time. (3) For the purpose of these regulations, the shareholders, directors or key management personnel of the depository, shall be deemed to be fit and proper if,- (a) they fulfil the criteria specified under sub-regulation (2) of this regulation; and (b) they have not been found to be of unsound mind by a court of competent jurisdiction and have not been declared a fugitive economic offender; and (c) they have not been convicted of an offence involving moral turpitude. (4) If any director or key management personnel of a depository is not deemed to be fit and proper under sub-regulation (3), the depository shall replace such a person within thirty days from the date of such disqualification, failing which the fit and proper person criteria may be invoked against the depository. (5) Any disqualification of the depository under sub-regulation (2) shall not have any bearing on the fit and proper status of the directors or key management personnel unless the directors or key management personnel are also found to incur the same disqualification in the said matter. (6) An order passed against the person by any other regulatory authority may be taken into account by the Board while determining the fit and proper person criteria. Page 14 of 85 (7) If any question arises on the decision of a depository as to whether a person is a fit and proper person, the decision of the Board on such question shall be final.] CHAPTER V GOVERNANCE OF DEPOSITORY Composition of the governing board 24. (1) The governing board of every depository shall include: (a) 20[non-independent directors]; (b) public interest directors; 21[***] (c) managing director 22[;and,] (d) 23[executive directors.] (2) Subject to prior approval of the Board, the chairperson shall be elected by the governing board from amongst the public interest directors. (3) The number of public interest directors shall not be less than the number of 24[non- independent directors] on the governing board of a Depository. (4) The number of public interest directors shall not be less than the number of 25[non- independent directors] to constitute the quorum for the meeting of the governing board. (5) The voting on a resolution in the meeting of the governing board shall be valid only when the number of public interest directors that have cast their vote on such resolution is equal to or more than the number of 26[non-independent directors] who have cast their vote on such resolution. (6) The casting vote in the meetings of the governing board of the depository shall be with the chairperson of the governing board. (7) The managing director 27[and executive directors] shall be included in the category of 28[non-independent directors]. 20 Substituted for the words “shareholder directors” by the Securities and Exchange Board of India (Depositories and Participants) (Amendment) Regulations, 2023, w.e.f. 28-08-2023. 21 The word and symbol “and,” omitted by the Securities and Exchange Board of India (Depositories and Participants) (Third Amendment) Regulations, 2025, w.e.f. 22-12.2025. 22 Substituted for the symbol “.” by the Securities and Exchange Board of India (Depositories and Participants) (Third Amendment) Regulations, 2025, w.e.f. 22-12.2025. 23 Inserted by the Securities and Exchange Board of India (Depositories and Participants) (Third Amendment) Regulations, 2025, w.e.f. 22-12.2025. 24 ibid 25 Ibid 26 ibid 27 Inserted by the Securities and Exchange Board of India (Depositories and Participants) (Third Amendment) Regulations, 2025, w.e.f. 22-12.2025. 28 Substituted for the words “shareholder directors” by the Securities and Exchange Board of India (Depositories and Participants) (Amendment) Regulations, 2023, w.e.f. 28-08-2023. Page 15 of 85 (8) Any employee of a depository may be appointed on the governing board in addition to the managing director, and such director shall be deemed to be a 29[non-independent directors]. (9) 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. (10) 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: Provided a person shall not be deemed to be Depository Participant or their associate for the purpose of sub-regulation 10, if he/she is on the board of a Public Financial Institution or Bank which is in public sector, or which has no identifiable ultimate promoter, or the ultimate promoter is in public sector or has well diversified shareholding, and such Public Financial Institution or Bank or its associate is a Depository Participant: Provided further that the independent directors of associates of Public Financial Institution or Bank in public sector, who is a Depository Participant and where the majority shareholding is that of such Public Financial Institution or Bank in public sector, shall not be deemed to be Depository Participant for the purpose of sub-regulation 10. (11) The appointment of director shall be subject to fulfillment of other requirements and satisfaction of the Board. (12) Depository shall monitor and ensure the compliance of sub-regulation 9 on continuous basis, to ensure that directors appointed, on their governing board, do not get associated with Depository Participant after approval and appointment. (13) No foreign portfolio investor shall have any representation in the governing board of a depository. 30[(14) (a) The governing board of the depository shall 31[consist of] directors having the requisite qualifications and experience in the areas of capital markets, finance and accountancy, legal and regulatory practice, technology, risk management, and management or administration: Provided that the governing board of the depository shall 32[consist of] at least one public interest director having the requisite qualification and experience in each of the areas of capital markets, finance and accountancy, legal and regulatory practice, and technology. (b) The depository may also appoint directors having qualification and experience in other areas which may be specific to them: 29 Ibid. 30 Inserted by the Securities and Exchange Board of India (Depositories and Participants) (Amendment) Regulations, 2023, w.e.f. 28-08-2023. 31 Substituted for the words “comprise of” by the Securities and Exchange Board of India (Depositories and Participants) (Second Amendment) Regulations, 2023 w.e.f . 23-08-2023. 32 ibid Page 16 of 85 Provided that the depository shall ensure that the governing board collectively 33[consists of] directors with qualification and experience as specified at clause (a) above. Nominees of the Board on the governing board of a depository. 24A. The Board may appoint one or more persons not exceeding three in number, as director(s) on the governing board of any depository and such director(s) shall exercise the same powers as the other directors of the governing board.] Conditions of appointment of directors 25. (1) The appointment and re-appointment of all 34[ non-independent directors] on the governing board of every depository shall be with the prior approval of the Board35[:] 36[Provided that the non-independent director on the governing board of the depository may be appointed in a recognized stock exchange or a recognized clearing corporation or another depository with the prior approval of the Board, only after a cooling-off period as may be specified by the governing board of such depository.] (2) The public interest directors on the governing board of a depository shall be 37[appointed with the prior approval of] by the Board. (3) Public interest directors shall be 38[appointed] for a term of three years, extendable by another term of three years, subject to performance review in the manner as may be specified by the Board: 39[Provided that upon the expiry of the term(s) at a depository, a public interest director may be appointed with the prior approval of the Board for a further term of three years in another depository or a recognized stock exchange or a recognized clearing corporation, only after a cooling-off period as may be specified by the governing board of such depository: Provided further that the cooling-off period will be applicable only in case of appointment as a public interest director in a competing depository] 33 Substituted for the words “comprises of” by the Securities and Exchange Board of India (Depositories and Participants) (Second Amendment) Regulations, 2023 w.e.f . 23-08-2023. 34 Substituted for the words “shareholder directors” by the Securities and Exchange Board of India (Depositories and Participants) (Amendment) Regulations, 2023, w.e.f. 28-08-2023. 35 Substituted for the symbol “.” by the Securities and Exchange Board of India (Depositories and Participants) (Second Amendment) Regulations, 2025, w.e.f. 29-07-2025. 36 Inserted by the Securities and Exchange Board of India (Depositories and Participants) (Second Amendment) Regulations, 2025, w.e.f. 29-07-2025. 37 Substituted for the words “nominated by” by the Securities and Exchange Board of India (Depositories and Participants) (Amendment) Regulations, 2023, w.e.f. 28-08-2023. 38 Substituted for the words “nominated” by the Securities and Exchange Board of India (Depositories and Participants) (Amendment) Regulations, 2023, w.e.f. 28-08-2023. 39 Substituted by the Securities and Exchange Board of India (Depositories and Participants) (Second Amendment) Regulations, 2025, w.e.f. 29-07-2025. Prior to its substitution, the proviso read as under: “Provided that post the expiry of term(s) at a depository, a public interest director may be appointed with the prior approval of for a term of three years in other depository or recognized stock exchange or a recognized clearing corporation, only after a cooling-off period of one year:” Page 17 of 85 Provided further that a person shall be 40[appointed] as a public interest director for a maximum of three terms across a depository 41[or] a recognized stock exchange 42[or] a recognized clearing corporation, subject to a maximum age limit of seventy five years. 43[Explanation: For the purpose of this sub-regulation, the expression “competing depository” shall be applicable in case of appointment of a public interest director from one depository to another depository.] (4) A public interest director on the board of a depository shall not act simultaneously as director on the board of its subsidiary or on the board of any other depository or recognized stock exchange or recognized clearing corporation or on the board of subsidiary of such other depository or recognized stock exchange or recognized clearing corporation. (5) A public interest director on the board of a depository shall not act simultaneously as member on more than five committees of that depository. (6) A public interest director on the board of a depository shall keep its governing board apprised of any conflict of interest, which may arise as a result of the public interest director providing services, either directly or indirectly, to depository participants or their associates and agents. (7) No public interest director shall become a 44[non-independent director] unless there is a cooling-off period of three years after ceasing to be a public interest director (8) No public interest director on the governing board of a depository shall become a director on the board of subsidiary of that depository unless there is a cooling-off period of three years after ceasing to be a public interest director. (9) Public interest directors shall be remunerated only by way of payment of sitting fees as admissible to independent directors in the Companies Act, 2013. (10) If any issue arises as to whether an assignment or position of a public interest director is in conflict with his role, the Board’s decision shall be final. (11) For the purpose of this regulation, the procedure for appointment of directors is prescribed under Part C of the Second Schedule. Appointment 45[,role and responsibilities] of Managing Director 26. (1) The appointment, renewal of appointment and termination of service of the managing director of a depository shall be subject to prior approval of the Board. 40 Substituted for the words “nominated” by the Securities and Exchange Board of India (Depositories and Participants) (Amendment) Regulations, 2023, w.e.f. 28-08-2023. 41 Substituted for the word “or” by the Securities and Exchange Board of India (Depositories and Participants) (Amendment) Regulations, 2023, w.e.f. 28-08-2023. 42 Ibid. 43 Inserted by the Securities and Exchange Board of India (Depositories and Participants) (Second Amendment) Regulations, 2025, w.e.f. 29-07-2025. 44 Substituted for the words “shareholder directors” by the Securities and Exchange Board of India (Depositories and Participants) (Amendment) Regulations, 2023, w.e.f. 28-08-2023. 45 Inserted by the Securities and Exchange Board of India (Depositories and Participants) (Third Amendment) Regulations, 2025, w.e.f. 22-12.2025. Page 18 of 85 (2) Every depository shall, subject to the guidelines issued by the Board from time to time, determine the qualification, manner of appointment, terms and conditions of appointment and other procedural formalities relating to the selection/ appointment of the managing director. (3) The appointment of the managing director shall be for a term not exceeding five years: Provided that post the completion of first term as Managing Director, the depository shall conduct the appointment process afresh: Provided further that a person may be appointed as Managing Director by the depository for a maximum 46[period of ten years] subject to a maximum age limit of sixty five years. (4) The managing director of a depository shall not— (a) be a shareholder or an associate of a shareholder of a depository or shareholder of an associate of a depository; (b) be a depository participant, or his associate and agent, or shareholder of a depository participant or shareholder of an associate and agent of a depository participant; or (c) hold any position concurrently in the subsidiary of a depository or in any other entity associated with a depository: Provided that the managing director of a depository may be appointed on the governing board, but not as managing director, of the subsidiary or associate of a depository. 47[Provided further that the managing director may, with the prior approval of the governing board of the depository, be appointed as: a) non-executive director on the board of a company registered under section 8 of the Companies Act, 2013; b) non-executive director on the board of an unlisted government company not engaged in any commercial activity; c) chairperson or member (non-executive capacity) of the governing board of an educational institution established by the Central Government, the State Government, a government company, or a statutory body; or d) chairperson or member (non-executive capacity) of the governing board of a university established or incorporated by or under a Central Act or a State Act.] (5) The managing director shall be liable for removal or termination of services by the governing board of the depository with the prior approval of the Board for failure to give effect to the directions, guidelines and other orders issued by the Board, or the rules, instructions, the articles of association and bye-laws of the depository. (6) The Board may suo motu remove or terminate the appointment of the managing director if deemed fit in the interest of securities market: 46 Substituted for the words “of two terms not exceeding five years each” by the Securities and Exchange Board of India (Depositories and Participants) (Amendment) Regulations, 2023, w.e.f. 28-08-2023. 47 Inserted by the Securities and Exchange Board of India (Depositories and Participants) (Third Amendment) Regulations, 2025, w.e.f. 22-12.2025. Page 19 of 85 Provided that no managing director shall be removed unless he has been given a reasonable opportunity of being heard. (7) The conditions specified under this regulation for appointment of managing director shall be applicable to a person holding position as managing director in a depository on the date of commencement of these regulations. Explanation: For the purpose of sub-regulation (7), the applicability shall be determined post the completion of the existing term and the prior term(s) completed by a managing director on the governing board of a depository shall also be considered while determining the eligibility. 48[(8) The roles and responsibilities of the managing director shall include the following: a) management of the whole of the affairs of the depository; b) ensure that the depository complies with the provisions of all applicable acts, rules and regulations, circulars, guidelines or directions issued thereunder from time to time; c) ensure that the functions under Vertical 1 and Vertical 2 of the depository, as provided in Fourth Schedule of these regulations, are performed in the interest of the securities market and are guided by public interest, without having any revenue-oriented objectives. d) be responsible for the overall risk management of the depository; and e) ensure that the depository has adequate infrastructure and systems in place for its efficient functioning at all points of time.] “Appointment, role and responsibilities of executive director 26A. (1) Every depository shall appoint two executive directors as key management personnel who shall head Vertical 1 and Vertical 2 respectively and the depository may, at its discretion, appoint an executive director to head Vertical 3, as referred to in Fourth Schedule of these regulations. (2) The stature of executive directors shall be similar to that of the managing director. (3) The process of appointment, renewal of appointment and termination of services of the executive directors shall be similar to that of the managing director as referred to in sub-regulations (1), (2), clauses (a) and (b) of (4), (5) and (6) of Regulation 26 of these regulations and subject to prior approval of the Board. 48 Inserted by the Securities and Exchange Board of India (Depositories and Participants) (Third Amendment) Regulations, 2025, w.e.f. 22-12.2025. Page 20 of 85 (4) The tenure and maximum age limit of the executive directors shall be similar to that of the managing director as referred to in sub-regulation (3) of Regulation 26 of these regulations. (5) The executive director of a depository shall not serve on the board of any other company: Provided that the executive director of a depository may, with the prior approval of the governing board of the depository, be appointed on the board of a subsidiary of a depository. (6) The roles and responsibilities of executive directors of Vertical 1 and Vertical 2 shall include the following: a) management of whole of the affairs of their respective verticals; b) ensure that the functions under their respective verticals of the depository are operating in the interest of the securities market and are guided by public interest, without having any revenue oriented objectives; c) the executive director of Vertical 1 shall be responsible to ensure that adequate infrastructure and systems are in place for efficient function of the depository; and d) the executive director of Vertical 2 shall be responsible for the overall risk management of the depository. 49[Code of Conduct for the governing board, directors, committee members and key management personnel] 27. 50[(1) The governing board, directors, committee members and key management personnel of a depository shall abide by the Code of Conduct specified under Part- B of Third Schedule of these regulations.] 51[***] (3) Every director and key management personnel of a depository shall satisfy the fit and proper person criteria at all times as per sub-regulation (2) of regulation 23. 49 Substituted for the words “Code of Conduct for directors and key management personnel” by the Securities and Exchange Board of India (Depositories and Participants) (Amendment) Regulations, 2023, w.e.f. 28-08-2023. 50Substituted by the Securities and Exchange Board of India (Depositories and Participants) (Amendment) Regulations, 2023, w.e.f. 28-08-2023. Prior to its substitution, sub-regulation (1) read as under: “(1) Every director of a depository shall abide by the Code of Conduct specified under Part-B of Third Schedule of these regulations.” 51 Omitted by the Securities and Exchange Board of India (Depositories and Participants) (Amendment) Regulations, 2023, w.e.f. 28-08-2023. Prior to its omission, sub-regulation (2) read as under: “(2) Every director and key management personnel of a depository shall abide by the Code of Ethics specified under Part-C of Third Schedule of these regulations.” Page 21 of 85 52 [***] Compensation and tenure of key management personnel 28. (1) A depository shall constitute a Nomination and Remuneration Committee comprising a majority of public interest directors and chaired by a public interest director. (2) The Nomination and Remuneration Committee shall determine the compensation of key management personnel in terms of a compensation policy. (3) The compensation policy shall be determined by Nomination and Remuneration committee in accordance with the norms specified by the Board under Part D of Second Schedule. (4) The compensation payable to the managing director shall be as approved by the Board and the terms and conditions of the compensation of the managing director shall not be changed without prior approval of the Board. (5) The compensation given to the key management personnel shall be disclosed in the Report of the depository under section 134 of the Companies Act, 2013. (6) The report under sub-regulation (5) shall 53[consist of] ratio of compensation paid to each key management personnel, vis-a-viz. median of compensation paid to other employees of the depository. (7) The tenure of a key management personnel, other than a director, in a department, shall be for a fixed period, as may be decided by the Nomination and Remuneration committee. Explanation: For the purpose of sub-regulation (7), the tenure refers to the period of posting as key management personnel in a regulatory department, which shall be for a fixed period. 54[Segregation of functions 29. (1) Every depository shall identify and segregate its functions into the following verticals: (a) Critical Operations; (b) Regulatory, Compliance, Risk Management and Investor Grievances; and 52 Omitted by the Securities and Exchange Board of India (Depositories and Participants) (Amendment) Regulations, 2023, w.e.f. 28-08-2023. Prior to its omission, sub-regulation (4) read as under: “(4) The Board may, for any failure by the directors to abide by these regulations or the Code of Conduct or Code of Ethics or in case of any conflict of interest, either upon a reference from the depository or suo motu, take appropriate action including removal or termination of the appointment of any director, after providing him a reasonable opportunity of being heard.” 53 Substituted for the words “comprise of” by the Securities and Exchange Board of India (Depositories and Participants) (Second Amendment) Regulations, 2023 w.e.f . 23-08-2023. 54 Substituted by the Securities and Exchange Board of India (Depositories and Participants) (Amendment) Regulations, 2023, w.e.f. 28-08-2023. Prior to its substitution, regulation 29 read as under: “29. Segregation of regulatory departments The depository shall segregate its regulatory departments from other departments in the manner specified in Fourth Schedule of these regulations.” Page 22 of 85 (c) Other functions including business development. (2) The functions of the verticals under sub-regulation (1) above are provided at Fourth Schedule of these regulations. (3) The functions under the verticals as provided at clause (a) and (b) of sub-regulation 1 shall be given higher priority by the depository over the functions under the vertical as provided at clause (c) of sub-regulation (1). (4) Every depository shall periodically and objectively assess the adequacy of resources allocated to the first two verticals as specified in clause (a) and (b) of sub-regulation (1). (5) Every depository shall adopt a "Chinese Wall" policy which separates the functions under vertical as provided at clause (b) of sub-regulation (1) from the functions of other verticals. (6) The employees referred to in sub-regulation (5) shall not communicate any information concerning their activity to any one in other verticals and may be physically segregated from employees in other verticals including with respect to access controls: Provided that in exceptional circumstances, employees from other verticals may be given confidential information on "need to know" basis, under intimation to the Compliance Officer.] Statutory committees 30. (1) The depository shall constitute the committees as per sub-regulation (2) 55[,] sub- regulation (3) and 56[and sub-regulation 3A] . (2) Functional committee, 57[consisting of]: (a) Member 58[*] committee 59[and]; (b) 60[***] (c) Nomination and remuneration committee. 55 Substituted for the words “and” by the Securities and Exchange Board of India (Depositories and Participants) (Amendment) Regulations, 2023, w.e.f. 28-08-2023. 56 Inserted by the Securities and Exchange Board of India (Depositories and Participants) (Amendment) Regulations, 2023, w.e.f. 28-08-2023. 57 Substituted for the words “comprising of” by the Securities and Exchange Board of India (Depositories and Participants) (Second Amendment) Regulations, 2023 w.e.f . 23-08-2023. 58 Omitted by the Securities and Exchange Board of India (Depositories and Participants) (Amendment) Regulations, 2019 w.e.f. 04-06-2019. Prior to its omission, it read as “selection”. 59 Inserted by the Securities and Exchange Board of India (Depositories and Participants) (Amendment) Regulations, 2023, w.e.f. 28-08-2023. 60 Omitted by the Securities and Exchange Board of India (Depositories and Participants) (Amendment) Regulations, 2023, w.e.f. 28-08-2023. Prior to its omission, clause(b) read as under- [[*]Grievance redressal committee; and] Omitted the word “investor” by the Securities and Exchange Board of India (Depositories and Participants) (Amendment) Regulations, 2019 w.e.f. 04-06-2019. Page 23 of 85 (3) Oversight committees, 61[consisting of]: (a) Standing committee on technology; (b) 62[***] (c) Regulatory oversight committee; and (d) Risk management committee. 63[(3A) Investment Committee.] (4) 64[The composition, quorum and functions of the committees under sub-regulation (2), (3) and (3A) shall be in the manner as specified by the Board from time to time.] 65[Grievance Redressal Panel 30A. Every depository shall have Grievance Redressal Panel(s) to resolve investor grievances which shall function in the manner as may be specified by the Board.] Disclosure and corporate governance norms 31. (1) The disclosure requirements and corporate governance norms as specified for listed companies shall mutatis mutandis apply to a depository. (2) The governing board of a depository shall confirm compliance of sub-regulation (1) in writing on half yearly basis to the Board. (3) Depository shall disclose resources committed towards strengthening regulatory functions and towards ensuring compliance with regulatory requirements applicable to the depository, backed by an activity based accounting in the report under section 134 of the Companies Act, 2013. (4) The fees and charges levied by a depository shall be placed for review before the Oversight Committee of such depository. 61Substituted for the words “comprising of” by the Securities and Exchange Board of India (Depositories and Participants) (Second Amendment) Regulations, 2023 w.e.f . 23-08-2023. 62 Omitted by the Securities and Exchange Board of India (Depositories and Participants) (Amendment) Regulations, 2023, w.e.f. 28-08-2023. Prior to its omission, clause(b) read as under- “(b) Advisory committee;” 63 Inserted by the Securities and Exchange Board of India (Depositories and Participants) (Amendment) Regulations, 2023, w.e.f. 28-08-2023. 64 Substituted by the Securities and Exchange Board of India (Depositories and Participants) (Amendment) Regulations, 2023, w.e.f. 28-08-2023. Prior to its substitution, sub-regulation (4) read as under- “(4)The composition, quorum and functions of the committees under sub-regulation (2) and sub-regulation (3) shall be in the manner as specified by the Board from time to time.” 65 Inserted by the Securities and Exchange Board of India (Depositories and Participants) (Amendment) Regulations, 2023, w.e.f. 28-08-2023. Page 24 of 85 66[(5) Every depository shall internally conduct annual evaluation of its performance and the performance of its statutory committees in such a manner as may be specified by the Board. (6) Every depository shall also appoint an independent external agency to evaluate its performance and the performance of its statutory committees within such periodicity and in such a manner as may be specified by the Board. (7) Every depository shall disclose, on their website, the agenda and minutes of its governing board meetings pertaining to regulatory, compliance, risk management and investor grievance areas, after approval of such minutes. (8) If any director or key management personnel is or becomes aware of any act of wrongdoing at the depository and fails to report to its governing board or to the Board, such a person may be liable for action under these regulations, after providing him a reasonable opportunity of being heard.] CHAPTER VI REGISTRATION OF PARTICIPANT Application for grant of certificate of registration 32. (1) An application for the grant of a certificate of registration as a participant shall be made to the Board in Form F of the First Schedule, through the depository in which the applicant proposes to act as a participant, shall be accompanied by the fee specified in Part A of the Second Schedule and be paid in the manner specified in Part B thereof. (2) The depository shall forward to the Board the application in Form F of the First Schedule as early as possible, but not later than thirty days along with its recommendations and certifying that the participant complies with the eligibility criteria including adequate infrastructure as provided for in these regulations and the bye-laws of the depository. Application to conform to the requirements 33. An application in Form F of the First Schedule, which is not complete in all respects and does not conform to the instructions specified therein, shall be rejected: Provided that before rejecting any such application, the applicant shall be given in writing an opportunity to remove within thirty days of the date of communication in this regard, the objections indicated by the Board: Provided further that the Board may, on being satisfied that it is necessary to extend the period specified in the first proviso, extend such period by such further time as it thinks necessary in order to enable the applicant to remove the objections indicated by the Board. 66 Ibid. Page 25 of 85 Furnishing information, clarification, and personal representation 34. (1) The Board may require the applicant, or the depository to which the applicant is to be admitted as a participant, to furnish such further information or clarification as may be considered necessary for the grant of a certificate of registration to the applicant. (2) The applicant or his authorised representative shall, if so required, appear before the Board for personal representation in connection with the grant of a certificate of registration. Consideration of application for grant of certificate of registration 35. For the purpose of grant of certificate of registration, the Board shall take into account all matters which are relevant to or relating to the efficient and orderly functioning of a participant and in particular, whether the applicant complies with the following requirements, namely :— (a) the applicant belongs to one of the following categories,— (i) a public financial institution as defined in section 2(72) of the Companies Act, 2013; (ii) a bank included for the time being in the Second Schedule to the Reserve Bank of India Act, 1934 (2 of 1934); (iii) a foreign bank operating in India with the approval of the Reserve Bank of India; (iv) a State Financial Corporation established under the provisions of section 3 of the State Financial Corporations Act, 1951 (63 of 1951); (v) an institution engaged in providing financial services, promoted by any of the institutions mentioned in sub-clauses (i), (ii), (iii) and (iv), jointly or severally; (vi) a custodian of securities who has been granted a certificate of registration by the Board under sub-section (1A) of section 12 of the Act; (vii) a clearing corporation or a clearing house of a stock exchange; (viii) a stock broker who has been granted a certificate of registration by the Board under sub-section (1) of section 12 of the Act : 67[Provided that the stock broker shall have a networth of rupees three crores {within one year of the date of notification of the Securities and Exchange Board of India (Depositories and Participants) (Amendment) Regulations, 2022}, which shall be increased to rupees five crores {within two years of the date of notification of the Securities and Exchange Board of India (Depositories and Participants) (Amendment) Regulations, 2022}: 67 Substituted by the Securities and Exchange Board of India (Depositories and Participants) (Amendment) Regulations, 2022 w.e.f. 23-02-2022. Prior to its substitution, the provisos read as – “Provided that the stock broker shall have a minimum net worth of rupees fifty lakhs and the aggregate value of portfolio of securities of the beneficial owners held in dematerialised form in a depository through him, shall not exceed hundred times of the net worth of the stock broker: Provided further that if the stock broker seeks to act as a participant in more than one depository, he shall comply with the criteria specified in the first proviso separately for each such depository: Provided also that where the stock broker has a minimum net worth of rupees ten crore, the limits on the aggregate value of the portfolio of securities of the beneficial owners held in dematerialized form in a depository through him shall not be applicable;” Page 26 of 85 Provided further that a self-clearing member fulfilling the networth requirements as provided under the Securities and Exchange Board of India (Stock Brokers) Regulations, 1992 shall also be eligible to register as a depository participant.] (ix) a non-banking finance company, having a net worth of not less than rupees fifty lakhs: Provided that such company shall act as a participant only on behalf of itself and not on behalf of any other person: Provided further that a non-banking finance company may act as a participant on behalf of any other person, if it has a net worth of rupees fifty crore in addition to the net worth specified by any other authority; (x) a registrar to an issue or share transfer agent who has a minimum net worth of rupees ten crores and who has been granted a certificate of registration by the Board under sub-section (1) of section 12 of the Act; (b) the applicant is eligible to be admitted as a participant of the depository through which it has made the application to the Board; (c) the applicant has adequate infrastructure, systems, safeguards and trained staff to carry on activity as a participant; (d) the applicant is a fit and proper person 68[under the Securities and Exchange Board of India (Intermediaries) Regulations, 2008]; and (e) the grant of certificate of registration is in the interests of investors in the securities market. Grant of certificate of registration 36. (1) After considering the application under regulation 32, with reference to the matters specified in regulation 35, if the Board is satisfied that the applicant is eligible for grant of certificate of registration, grant a certificate in Form G of the First Schedule. (2) The grant of certificate of registration in Form G of the First Schedule shall be subject to the following, namely:— (a) the participant shall pay the registration fee specified in Part A of the Second Schedule in the manner specified in Part B thereof, within fifteen days of the receipt of intimation from the Board; (b) the participant shall comply with the provisions of the Act, Depositories Act, the bye- laws, agreements and these regulations; (c) the depository through which an application for certificate of registration has been forwarded holds a certificate of commencement of business under regulation 16; (d) where the participant proposes change in control, it shall obtain prior approval of the Board for continuing to act as such after the change; 68 Inserted by the Securities and Exchange Board of India (Depositories and Participants) (Second Amendment) Regulations, 2023 w.e.f . 23-08-2023. Page 27 of 85 (e) if any information previously submitted by the participant to the Board is found to be false or misleading in any material particular, or if there is any change in such information, the participant shall forthwith inform the Board in writing ; (f) the participant shall redress the grievances of beneficial owners within 69[twenty-one calendar days] of the date of the receipt of the complaint and keep the depository informed about the number and the nature of redressals; and (g) the participant shall pay annual fees specified in Part A of the Second Schedule in the manner specified in Part B thereof. (3) The certificate of registration granted under sub-regulation (1) shall be valid unless it is suspended or cancelled by the Board. (4) The participant who has already been granted certificate of registration by the Board, prior to the commencement of the Securities and Exchange Board of India (Change in Conditions of Registration of Certain Intermediaries) (Amendment) Regulations, 2016 shall be deemed to have been granted a certificate of registration, in terms of sub- regulation (1). (5) The participant, to keep the registration in force, shall pay registration fee as specified in Part A of the Second Schedule for every five years from the sixth year of the date of grant of certificate of registration or of the date of grant of certificate of initial registration granted prior to the commencement of the Securities and Exchange Board of India (Change in Conditions of Registration of Certain Intermediaries) (Amendment) Regulations, 2016, as the case may be. 70[(6) The fee specified in sub-regulation (5) shall be paid one month prior to the expiry of the block for which the fee has been paid.] (7) The participant shall immediately intimate the Board, details of changes that have taken place in the information that was submitted, while seeking registration. Participants to abide by code of conduct 37. The participant holding a certificate of registration shall, at all times, abide by the Code of Conduct as specified in Part A of Third Schedule. Acting as participant in more than one depository 38. (1) A participant who has been granted a certificate of registration may act as a participant of another depository without obtaining separate certificate of registration subject to approval by such other depository. 69 Substituted for “thirty days” by the Securities and Exchange Board of India (Facilitation of Grievance Redressal Mechanism) (Amendment) Regulations, 2023 w.e.f. 18-08-2023. 70 Substituted by the SEBI (Payment of Fees and Mode of Payment) (Amendment) (Regulations) 2021 w.e.f. 05- 05-2021. Prior to substitution the clause read as: “(6) The fee specified in sub-regulation (5) shall be paid three months prior to the expiry of the block for which the fee has been paid.” Page 28 of 85 (2) Such a participant who desires to act as a participant of another depository shall apply to such other depository for approval in the manner as specified by the Board. (3) On receipt of an application under sub-regulation (2), the depository shall, on being satisfied with the compliance of the provisions of these regulations and other relevant eligibility requirements specified by the Board, grant approval to act as its participant subject to payment of registration fees specified in Part A of Second Schedule in the manner specified in Part B thereof, by the participant within fifteen days of the receipt of intimation from the depository. (4) The depository shall inform the Board about the approval granted under sub-regulation (5) A participant who has been granted approval under sub-regulation (3) shall pay annual fees specified in Part A of Second Schedule in the manner specified in Part B thereof, separately for each depository. (6) To keep the registration in force, a participant who has been granted approval under sub- regulation (3) shall pay registration fees specified in Part A of Second Schedule in the manner specified in Part B thereof, for every five years from the sixth year of the date of grant of approval by the depository. Procedure where certificate of registration is not granted 39. (1) Where an application for the grant of certificate of registration under regulation 32 does not satisfy the requirements specified in regulation 35, the Board shall reject the application after giving the applicant an opportunity of being heard. (2) The decision of the Board to reject the application shall be communicated to the applicant in writing within thirty days of such decision, stating therein the grounds on which the application has been rejected. CHAPTER VII RIGHTS AND OBLIGATIONS OF DEPOSITORIES, PARTICIPANTS, ISSUERS, MANNER OF SURRENDER OF CERTIFICATE OF SECURITY AND CREATION OF PLEDGE OR HYPOTHECATION Rights and obligations of depositories, etc. 40. The depositories, participants, issuers, and issuers’ agents, in addition to the rights and obligations laid down in the Depositories Act and the bye-laws shall have the rights and obligations arising from the agreements entered into by them. 71[Investor Charter. 40A. The depository participant shall ensure compliance with the Investor Charter specified by the Board from time to time.] 71 Inserted by the Securities and Exchange Board of India (Investor Charter) (Amendment) Regulations, 2025 w.e.f. 10-02-2025. Page 29 of 85 Depository to declare specific securities eligible 41. Every depository shall, in its bye-laws, state the specific securities which are eligible for being held in dematerialised form in the depository. Security eligible for dematerialisation 42. The following securities shall be eligible for being held in dematerialised form in a depository :— (a) shares, scrips, stocks, bonds, debentures, debenture stock , Indian Depository Receipts 72[, Electronic Gold Receipt] or other marketable securities of a like nature in or of any incorporated company or other body corporate; (b) units of mutual funds, rights under collective investment schemes and venture capital funds, commercial paper, certificates of deposit, securitised debt, money market instruments, Government securities and unlisted securities shall also be similarly eligible for being held in dematerialised form in a depository; (c) any other security as may be specified by the Board from time to time, by way of a notification in the Official Gazette and subject to such conditions as it may deem fit to impose. Agreement between depository and issuer 43. (1) Either on the issuer or on the investor exercising an option to hold his securities with a depository in dematerialised form, the issuer shall enter into an agreement with the depository to enable the investor to dematerialise the securities: Provided that no agreement shall be required to be entered into where the depository itself is an issuer of securities: Provided further that no such agreement shall be required to be entered into where the State or the Central Government is the issuer of Government securities. (2) Where the issuer has appointed a Registrar to the Issue or Share Transfer Agent, who has been granted certificate of registration by the Board under sub-section (1) of section 12 of the Act, the depository shall enter into a tripartite agreement with the issuer and the Registrar to the Issue or Share Transfer Agent, as the case may be, in respect of the securities to be declared by the depository as eligible to be held in dematerialised form. Systems and procedures 44. Every depository shall have systems and procedures which will enable it to co-ordinate with the issuer or its agent, and the participants, to reconcile the records of ownership of securities with the issuer or its agent, as the case may be, and with participants, on a daily basis. 72 Inserted by the Securities and Exchange Board of India (Vault Managers) Regulations, 2021 w.e.f. 31-12-2021. Page 30 of 85 Connectivity 45. Every depository shall maintain continuous electronic means of communication with all its participants, issuers or issuers’ agents, as the case may be, clearing houses and clearing corporations of the stock exchanges and with other depositories. Mechanism for investor protection 46. The depository shall satisfy the Board that it has a mechanism in place to ensure that the interests of the persons buying and selling securities held in the depository are adequately protected. Withdrawal by participant 47. Every depository shall allow any participant to withdraw, or transfer its account, if the request for such withdrawal or transfer is in accordance with conditions stipulated therefor in the bye-laws of the depository. Internal monitoring, review and evaluation of systems and controls 48. Every depository shall have adequate mechanisms for the purposes of reviewing, monitoring and evaluating the depository’s controls systems, procedures and safeguards. External monitoring, review and evaluation of systems and controls 49. Every depository shall cause an inspection of its controls, systems, procedures and safeguards to be carried out annually and forward a copy of the report to the Board. Business Continuity Plan 50. A depository shall have adequate Business Continuity Plan for data and electronic records to prevent, prepare for, and recover from any disaster. Wind-down Plan. 51. Every depository shall devise and maintain a wind-down plan in accordance with guidelines specified by the Board. Explanation: For the purpose of this regulation, 'wind-down plan' means a process or plan of action employed, for transfer of the beneficial owner accounts and other two operational powers of the depository to an alternative institution that would take over the operations of the depository in scenarios such as erosion of net-worth of the depository or its insolvency or its inability to provide critical depository operations or services. Insurance against risks 52. Every depository shall take adequate measures including insurance to protect the interests of the beneficial owners against risks likely to be incurred on account of its activities as a depository. Page 31 of 85 Manner of keeping records 53. Where records are kept electronically by the depository, it shall ensure that the integrity of the automatic data processing systems is maintained at all times and take all precautions necessary to ensure that the records are not lost, destroyed or tampered with and in the event of loss or destruction, ensure that sufficient back up of records is available at all times at a different place. Records to be maintained. 54. (1) Every depository shall maintain the following records and documents, namely :— (a) records of securities dematerialised and rematerialised; (b) the names of the transferor, transferee, and the dates of transfer of securities; (c) a register and an index of beneficial owners; (d) details of the holding of the securities of beneficial owners as at the end of each day; (e) records of instructions received from and sent to participants, issuers, issuers’ agents and beneficial owners; (f) records of approval, notice, entry and cancellation of pledge or hypothecation, as the case may be; (g) details of participants; (h) details of securities declared to be eligible for dematerialisation in the depository; and (i) such other records as may be specified by the Board for carrying on the activities as a depository. (2) Every depository shall intimate the Board the place where the records and documents are maintained. (3) Subject to the provisions of any other law the depository shall preserve records and documents for a minimum period of eight years. Co-operation with other entities 55. Every depository shall extend all such co-operation to the beneficial owners, issuers, issuers’ agents, custodians of securities, other depositories and clearing organizations as is necessary for the effective, prompt and accurate clearance and settlement of securities transactions and conduct of business. Consolidated account statement 56. In order to enable generation of a consolidated account statement for the use of a beneficial owner in respect of all demat assets held by him, the depository shall enter into necessary agreements for sharing of such information. Prohibition of assignment 57. No depository shall assign or delegate to any other person its functions as a depository, without the prior approval of the Board. Page 32 of 85 Agreement by participant 58. Every participant shall enter into an agreement with a beneficial owner before acting as a participant on his behalf, in a manner specified by the depository in its bye-laws. Separate accounts 59. (1) Separate accounts shall be opened by every participant in the name of each of the beneficial owners and the securities of each beneficial owner shall be segregated, and shall not be mixed up with the securities of other beneficial owners or with the participant’s own securities. (2) A participant shall register the transfer of securities to or from a beneficial owner’s account only on receipt of instructions from the beneficial owner and thereafter confirm the same to the beneficial owner in a manner as specified by the depository in its bye-laws. (3) Every entry in the beneficial owner’s account shall be supported by electronic instructions or any other mode of instruction received from the beneficial owner in accordance with the agreement with the beneficial owner. Statement of accounts 60. Every participant shall provide statements of account to the beneficial owner in such form and in such manner and at such time as provided in the agreement with the beneficial owner. 73[Nomination 60A. (1) Every participant shall provide an option to the beneficial owner to nominate, in the manner as may be specified, a person to whom the securities held by him shall vest in the event of his death. (2) Every participant shall provide an option to the beneficial owner to nominate, in the manner as may be specified, a person who shall be authorized to conduct transactions on behalf of the beneficial owner in the event of the incapacitation of the beneficial owner. (3) Where the account is held in the name of more than one person jointly, the joint beneficial owners may together nominate, in the manner specified, a person upon whom the securities held by them shall vest, in the event of the death of all the joint beneficial owners. (4) The depository and participant shall not be liable for any action taken on the basis of nomination made by the beneficial owner.] 73 Inserted by the Securities and Exchange Board of India (Depositories and Participants) (Third Amendment) Regulations, 2024 w.e.f. 02-12-2024 Page 33 of 85 Transfer or withdrawal by beneficial owner 61. Every participant shall allow a beneficial owner to withdraw or transfer from his account in such manner as specified in the agreement with the beneficial owner. Connectivity 62. Every participant shall maintain continuous electronic means of communication with each depository in which it is a participant. Monitoring, reviewing and evaluating internal systems and controls 63. Every participant shall have adequate mechanism for the purpose of reviewing, monitoring and evaluating the participant’s internal accounting controls and systems. Reconciliation 64. Every participant shall reconcile his records with every depository in which it is a participant on a daily basis. Returns 65. Every participant shall submit periodic returns to the Board and to every depository in which it is a participant in the format specified by the Board or the bye-laws of the depository, as the case may be. Record of services 66. (1) Every participant shall maintain the following records and documents, namely :— (a) records of all the transactions entered into with a depository and with a beneficial owner; (b) details of securities dematerialised, rematerialised on behalf of beneficial owners with whom it has entered into an agreement; (c) records of instructions received from beneficial owners and statements of account provided to beneficial owners; and (d) records of approval, notice, entry and cancellation of pledge or hypothecation, as the case may be. (2) Every participant shall make available for the inspection of the depository in which it is a participant all records referred to in sub-regulation (1). (3) Every participant shall allow persons authorised by the depository in which it is a participant to enter its premises during normal office hours and inspect its records. Page 34 of 85 (4) Every participant shall intimate the Board the place where the records and documents are maintained. (5) Subject to the provisions of any other law, the participant shall preserve records and documents for a minimum period of eight years. Manner of keeping records 67. Where records are kept electronically by the participant it shall ensure that the integrity of the data processing systems is maintained at all times and take all precautions necessary to ensure that the records are not lost, destroyed or tampered with and in the event of loss or destruction, ensure that sufficient back up of records is available at all times at a different place. Records to be maintained depository-wise 68. If a participant enters into an agreement with more than one depository, it shall maintain the records specified in regulation 66 separately in respect of each depository. Prohibition of assignment 69. No participant shall assign or delegate its functions as participant to any other person, without the prior approval of the depository. Agreement by issuer 70. Every issuer whose securities have been declared as eligible to be held in dematerialised form in a depository shall enter into an agreement with the depository in accordance with the provisions of regulation 43: Provided that no agreement shall be required to be entered into in case,— (i) the depository is the issuer of securities; or (ii) the State or the Central Government is the issuer of Government securities. Manner of handling share registry work 71. All matters relating to transfer of securities, maintenance of records of holders of securities, handling of physical securities and establishing connectivity with the depositories shall be handled and maintained at a single point i.e. either in-house by the issuer or by a Share Transfer Agent registered with the Board. 74[Redressal of investor grievances 74 Substituted by the Securities and Exchange Board of India (Facilitation of Grievance Redressal Mechanism) (Amendment) Regulations, 2023 w.e.f. 18-08-2023. Prior to substitution, it read as follows: “Redressal of investor grievances Every issuer or its agent or any person who is registered as an intermediary under this regulation, shall redress the grievances of beneficial owners within thirty days of the date of receipt of the complaint and keep the Page 35 of 85 72. (1) The issuer or its agent or any person who is registered as an intermediary under these regulations shall redress investor grievances promptly but not later than twenty-one calendar days from the date of receipt of the grievance and in such manner as may be specified by the Board. (2) The Board may also recognize a body corporate for handling and monitoring the process of grievance redressal within such time and in such manner as may be specified.] Investor Protection Fund 73. (1) Every depository shall establish and maintain an Investor Protection Fund for the protection of interest of beneficial owners: Provided that this Fund shall not be used by the depository for the purpose of indemnifying the beneficial owner under section 16 of the Depositories Act, 1996. (2) Every depository shall credit five percent or such percentage as may be specified by the Board, of its profits from depository operations every year to the Investor Protection Fund. (3) The contribution to and utilization of the Investor Protection Fund shall be in accordance with the norms specified by the Board. Manner of surrender of certificate of security 74. (1) Any beneficial owner, who has entered into an agreement with a participant, shall inform the participant of the details of the certificate of security which is to be dematerialised, and shall surrender such certificate to the participant : Provided that where a beneficial owner has appointed a custodian of securities, then he may surrender the certificates of security to the participant through his custodian of securities. (2) The participant shall, on receipt of information under sub-regulation (1), forward such details of the certificate of security to the depository and shall confirm to the depository that an agreement has been entered into between the participant and the beneficial owner. (3) The participant shall maintain records indicating the names of beneficial owners of the securities surrendered, the number of securities and other details of the certificate of security received. (4) The participant shall, within seven days of the receipt of certificate of security referred to in sub-regulation (1) furnish to the issuer details specified in sub-regulation (2) along with the certificate of security. (5) Within fifteen days of receipt of the certificate of security from the participant the issuer shall confirm to the depository that securities comprised in the said certificate have been listed on the stock exchange or exchanges where the earlier issued securities are listed and shall also after due verification immediately mutilate and cancel the certificate of security and substitute in its record the name of the depository as the registered owner and shall send a certificate to this effect to the depository and to every stock exchange where the security is listed: depository informed about the number and nature of grievances redressed by it and the number of grievances pending before it.” Page 36 of 85 Provided that in case of unlisted companies the condition of listing on all the stock exchanges where earlier issued shares are listed, shall not be applicable. (6) Immediately upon receipt of information from the issuer under sub-regulation (5), the depository shall enter in its records the name of the person who has surrendered the certificate of security as the beneficial owner, as well as the name of the participant from whom it has received intimation under sub-regulation (2), and shall send an intimation of the same to the participant. (7) The issuer shall maintain a record of certificates of securities which have been dematerialised. Reconciliation 75. The issuer or its agent shall reconcile the records of dematerialised securities with all the securities issued by the issuer, on a daily basis: Provided that where the State or the Central Government is the issuer of Government securities, the depository shall, on a daily basis, reconcile the records of the dematerialised securities. Audit 76. (1) Every issuer shall submit audit report on a quarterly basis, starting from September 30, 2003, to the concerned stock exchanges audited by a qualified Chartered Accountant or a practicing Company Secretary 75[or a practicing Cost Accountant], for the purposes of reconciliation of the total issued capital, listed capital and capital held by depositories in dematerialized form, the details of changes in share capital during the quarter and the in- principle approval obtained by the issuer from all the stock exchanges where it is listed in respect of such further issued capital. (2) The audit report under sub-regulation (1) shall also give the updated status of the register of members of the issuer and confirm that securities have been dematerialized as per requests within twenty one days from the date of receipt of requests by the issuer and where the dematerialization has not been effected within the said stipulated period, the report shall disclose the reasons for such delay. (3) The issuer shall immediately bring to the notice of the depositories and the stock exchanges, any difference observed in its issued, listed, and the capital held by depositories in dematerialised form. Connectivity 77. Every issuer or its agent shall establish continuous electronic means of communication with the depository with which it has entered into an agreement. 75 Inserted by the Securities and Exchange Board of India (Depositories and Participants) (Second Amendment) Regulations, 2021 w.e.f. 26-10-2021. Page 37 of 85 Information 78. Every issuer whose securities have been declared as eligible for dematerialisation in a depository shall give information to the depository about book closures, record dates, dates for the payment of interest or dividend, dates for annual general meetings and other meetings, dates for redemption of debentures, dates for conversion of debentures and warrants, call money dates and such other information at the time and in the manner as may be specified by the depository in its bye-laws or agreement: Provided that no such information would be required to be given to the depository where the State or the Central Government is the issuer of Government securities. Manner of creating pledge or hypothecation 79. (1) If a beneficial owner intends to create a pledge on a security owned by him he shall make an application to the depository through the participant who has his account in respect of such securities. (2) The participant after satisfaction that the securities are available for pledge shall make a note in its records of the notice of pledge and forward the application to the depository. (3) Within fifteen days of receipt of the application, the depository shall after concurrence of the pledgee through its participant, create and record the pledge and send an intimation of the same to the participants of the pledger and the pledgee. (4) On receipt of the intimation under sub-regulation (3) the participants of both the pledger and the pledgee shall inform the pledger and the pledgee respectively of the entry of creation of the pledge. (5) If the depository does not create the pledge, it shall send along with the reasons an intimation to the participants of the pledger and the pledgee. (6) The entry of pledge made under sub-regulation (3) may be cancelled by the depository if pledger or the pledgee makes an application to the depository through its participant: Provided that no entry of pledge shall be cancelled by the depository without prior concurrence of the pledgee. (7) The depository on the cancellation of the entry of pledge shall inform the participant of the pledger. (8) Subject to the provisions of the pledge document, the pledgee may invoke the pledge and on such invocation, the depository shall register the pledgee as beneficial owner of such securities and amend its records accordingly. (9) After amending its records under sub-regulation (8) the depository shall immediately inform the participants of the pledger and pledgee of the change who in turn shall make the necessary changes in their records and inform the pledger and pledgee respectively. (10) If a beneficial owner intends to create a hypothecation on a security owned by him he may do so in accordance with the provisions of sub-regulations (1) to (9). (11) The provisions of sub-regulations (1) to (9) shall mutatis mutandis apply in such cases of hypothecation: Page 38 of 85 Provided that the depository before registering the hypothecatee as a beneficial owner shall obtain the prior concurrence of the hypothecator. (12) No transfer of security in respect of which a notice or entry of pledge or hypothecation is in force shall be effected by a participant without the concurrence of the pledgee or the hypothecatee, as the case may be. 76[Explanation:- For the purpose of these regulations, “pledge” includes re-pledge of securities for margin and / or settlement obligations of the client or such other purposes as specified by the Board from time to time.] Investment advice 80. (1) A depository or a participant or any of their employees shall not render, directly or indirectly, any investment advice about any security in the publicly accessible media, whether real-time or non-real-time, unless a disclosure of his interest including long or short position in the said security has been made, while rendering such advice. (2) In case an employee of the depository or the participant is rendering such advice, he shall also disclose the interest of his dependent family members and the employer including their long or short position in the said security, while rendering such advice. Appointment of compliance officer 81. A depository and a participant shall appoint a compliance officer who shall be responsible for monitoring the compliance of the Act, rules and regulations, notifications, guidelines, instructions, etc., issued thereunder and for redressal of investors’ grievances. (2) The compliance officer shall immediately and independently report to the Board any non-compliance observed by him. 77[(3) The compliance officer shall submit a report of any non-compliance of the Act, the Depositories Act, 1996, rules, regulations, circulars or directions issued thereunder and for the redressal of investors' grievances, to the Board on a quarterly basis in the manner as may be specified by the Board. Appointment of the chief risk officer 81A. (1) Every depository shall appoint a chief risk officer to identify, monitor and initiate necessary steps to mitigate the risk associated with the functioning of a depository. (2) The chief risk officer shall be responsible for the overall risk management of the depository and submit a report to the Board on half-yearly basis.] 78[Appointment, role and responsibilities of chief technology officer 76 Inserted by the Securities and Exchange Board of India (Depositories and Participants) (Amendment) Regulations, 2020 w.e.f. 21-02-2020 77 Inserted by the Securities and Exchange Board of India (Depositories and Participants) (Amendment) Regulations, 2023, w.e.f. 28-08-2023. 78 Inserted by the Securities and Exchange Board of India (Depositories and Participants) (Third Amendment) Regulations, 2025, w.e.f. 22-12.2025. Page 39 of 85 81B. (1) Every depository shall appoint a chief technology officer to oversee and manage technology-related system design, infrastructure, and operations. (2) The role and responsibilities of the chief technology officer shall include the following: (a) manage risks in all information technology related functions; (b) formulate the information technology policy and the information technology risk management framework; and (c) resolution and mitigation of observations arising from technology audits. Appointment, role and responsibilities of chief information security officer 81C. (1) Every depository shall appoint a chief information security officer to assess, identify, and mitigate cybersecurity risks associated with the functioning of depository and respond to cybersecurity incidents. (2) The role and responsibilities of the chief information security officer shall include the following: (a) establish appropriate standards and controls; (b) direct the establishment and implementation of processes and procedures as per the cybersecurity and cyber resilience policy approved by the governing board of the depository; and (c) cyber security initiatives including planning, developing, maintaining, reviewing and implementation of Information Security Policies.] Equal, fair and transparent access 82. A depository shall ensure equal, unrestricted, transparent and fair access to all persons without any bias towards its associates and related entities. 79[Information and Data Sharing Policy 82A (1) Every depository and the company where the depository has invested shall lay down a framework for sharing and monitoring of data, including confidential and sensitive data. (2) The policy framework shall contain:- (a) means and manner of data sharing; (b) types of data that can be shared; 79 Ibid. Page 40 of 85 (c) escalation matrix for data sharing; (d) provisions to have a digital database for recording details of information shared along with recipients and reasons for sharing, etc.; (e) mechanism to monitor the data shared, through use of technology, including periodic audits to ensure compliance with the policy framework; and (f) accountability mechanism including fixing individual accountabilities for any breach of data sharing policy.] 80[Responsibility for the use of artificial intelligence 82AA. A depository which uses artificial intelligence and machine learning tools and techniques, either designed by it or procured from third-party technology service providers, irrespective of the scale and scenario of adoption of such tools for conducting its business and servicing its clients or constituents, shall be solely responsible– a) for the privacy, security and integrity of investors’ and stakeholders’ data including data maintained by it in a fiduciary capacity throughout the processes involved; b) for the output arising from the usage of such tools and techniques it relies upon or deals with; and c) for the compliance with applicable laws in force. Explanation: For the purpose of this regulation, the expression “artificial intelligence and machine learning tools and techniques” may include any application or software program or executable system or a combination thereof, offered by the depository to investors/stakeholders or used internally by it to facilitate trading and settlement or to carry out its activities including for compliance requirements and the same are portrayed as part of the products offered to the public or under usage for compliance or management or other business purposes.] 81[CHAPTER VIIA RESTRICTION IN DEALING WITH OTHER ENTITIES Restriction in having association with certain persons 82B. (1) No depository or its agent, shall have any direct or indirect association, with another person who- 80 Inserted by the Securities and Exchange Board of India (Depositories and Participants) (Amendment) Regulations, 2025, w.e.f. 10.02.2025. 81 Inserted by the Securities and Exchange Board of India (Depositories and Participants) (Second Amendment) Regulations, 2024, w.e.f. 29-08-2024. Page 41 of 85 (i) provides advice or any recommendation, directly or indirectly, in respect of or related to a security or securities, unless the person is registered with or otherwise permitted by the Board to provide such advice or recommendation; or (ii) makes any claim, of returns or performance expressly or impliedly, in respect of or related to a security or securities, unless the person has been permitted by the Board to make such a claim: Provided that the provisions of this sub-regulation shall not apply in respect of an association through a specified digital platform. (2) The depository shall ensure that any person associated with it or its agent does not engage in the activities mentioned in clauses (i) or (ii) of sub-regulation (1) without the necessary permission. Explanation 1. – For the purposes of this regulation, the expression “association” shall mean- (a) a transaction involving money or money’s worth; (b) referral of a client; (c) interaction of information technology systems; (d) any other association of a similar nature or character. Explanation 2. – For the purposes of this regulation, the expression “specified digital platform” shall mean a digital platform as specified by the Board, which has a mechanism in place to take preventive as well as curative action, to the satisfaction of the Board, to ensure that such a platform is not used for indulging in any activity as referred to in clause (i) or (ii) of sub- regulation (1). Explanation 3. – For the removal of doubts, it is clarified that the term “another person” in this regulation shall not include a person who is engaged in investor education, provided that such a person does not, directly or indirectly, indulge in any activity as referred to in clause (i) or (ii) of sub-regulation (1) without the necessary permission. 82C. The Board may, in case of violation of any of the provisions of regulation 82B, take such action as it may deem fit including action under Chapter V of the Securities and Exchange Board of India (Intermediaries) Regulations, 2008.] CHAPTER VIII LISTING OF SECURITIES Listing 83. (1) Subject to the provisions of applicable laws in force, a depository may apply for listing of its securities on a recognised stock exchange if,─ (a) it is compliant with the provisions of these regulations particularly those relating to ownership and governance; Page 42 of 85 (b) it has completed three years of continuous depository operations immediately preceding the date of application of listing; and (c) it has obtained approval of the Board. (2) The Board may specify such conditions as it may deem fit in the interest of the securities market including those in relation to transfer of shares held by any person. (3) A depository or its associates shall not list its securities on a recognized stock exchange that is an associate of the depository. CHAPTER IX INSPECTION 82[Power to call for information 83A. The Board may from time to time call for any information, documents or records from the depository or its governing board or any shareholder or applicant thereof and from depository participant.] Board’s right to inspect 84. The Board may appoint one or more persons as inspecting officer to undertake inspection of the books of account, records, documents and infrastructure, systems and procedures, or to investigate the affairs of a depository, a participant, a beneficial owner an issuer or its agent for any of the following purposes, namely:— (a) to ensure that the books of account are being maintained by the depository, participant, issuer or its agent in the manner specified in these regulations; (b) to look into the complaints received from the depositories, participants, issuers, issuers’ agents, beneficial owners or any other person; (c) to ascertain whether the provisions of the Act, the Depositories Act, the bye-laws, agreements and these regulations are being complied with by the depository, participant, beneficial owner, issuer or its agent; (d) to ascertain whether the systems, procedures and safeguards being followed by a depository, participant, beneficial owner, issuer or its agent are adequate; (e) to suo motu ensure that the affairs of a depository, participant, beneficial owner, issuer or its agent, are being conducted in a manner which are in the interest of the investors or the securities market. Notice before inspection and investigation. 85. (1) Before ordering an inspection or investigation under regulation 84, the Board shall give not less than ten days notice to the depository, participant, beneficial owner, issuer or its agent, as the case may be. 82 Inserted by the Securities and Exchange Board of India (Depositories and Participants) (Amendment) Regulations, 2023, w.e.f. 28-08-2023. Page 43 of 85 (2) Notwithstanding anything contained in sub-regulation (1), where the Board is satisfied that in the interest of the investors no such notice should be given, it may, by an order in writing direct that such inspection be taken up without such notice. (3) During the course of an inspection or investigation, the depository, a participant, a beneficial owner, an issuer or its agent against whom the inspection or investigation is being carried out shall be bound to discharge his obligation as provided in regulation 86. Obligations on inspection by the Board 86. (1) It shall be the duty of the depository, a participant, a beneficial owner, an issuer or its agent whose affairs are being inspected or investigated, and of every director, officer and employee thereof, to produce to the inspecting officer such books, securities, accounts, records and other documents in its custody or control and furnish him with such statements and information relating to his activities as a depository, a participant, a beneficial owner, an issuer or its agent, as the inspecting officer may require, within such reasonable period as the inspecting officer may specify. (2) The depository, a participant, a beneficial owner, an issuer or its agent also allow the inspecting officer to have reasonable access to the premises occupied by him or by any other person on his behalf and also extend reasonable facility for examining any books, records, documents and computer data in the possession of the depository, a participant, a beneficial owner, an issuer or its agent or such other person and also provide copies of documents or other materials which, in the opinion of the inspecting officer are relevant for the purposes of the inspection. (3) The inspecting officer, in the course of inspection or investigation, shall be entitled to examine or to record the statements of any director, officer or employee of the depository, a participant, a beneficial owner, an issuer or its agent. (4) It shall be the duty of every director, officer or employee of the depository, a participant, a beneficial owner, an issuer or its agent to give to the inspecting officer all assistance in connection with the inspection, which the inspecting officer may reasonably require. Submission of report to the Board 87. The inspecting officer shall, as soon as possible, on completion of the inspection or investigation as the case may be, submit a report to the Board: Provided that if directed to do so by the Board, he may submit interim reports. Action on inspection or investigation report 88. The Board or the Chairman shall after consideration of inspection or investigation report take such action as the Board or Chairman may deem fit and appropriate including action under Chapter V of the Securities and Exchange Board of India (Intermediaries) Regulations, 2008. Appointment of Auditor Page 44 of 85 89. The Board shall have the power to appoint an auditor to inspect or investigate, into the books of account, records, documents, infrastructures, systems and procedures or affairs of a depository, a participant, a beneficial owner, an issuer or its agent : Provided that the auditor so appointed shall have the same powers of the inspecting or investigating officer as stated in regulations 84 and 85, and the obligation of the depository, participant, beneficial owner, issuer or its agent and their respective directors, officers and employees, as the case may be, as stated in regulation 86, shall be applicable to the inspection or investigation under this regulation. Board to recover the expenses 90. The Board shall be entitled to recover from the depository, participant, beneficial owner, issuer or its agent, as the case may be, such expenses including fees paid to the auditors as may be incurred by it for the purposes of inspecting or investigating the books of account, records, documents, infrastructures, system and procedures of the depository, participant, beneficial owner, issuer or its agent, as the case may be. Application of Chapter 91. Nothing contained in this Chapter shall be applicable to the State or the Central Government where it is the issuer of the Government securities. 83[CHAPTER IX-A ENFORCEMENT Power to issue directions and levy penalty by the Board 91A. (1) Without prejudice to exercise of its powers under the provisions of the Act, Depositories Act, 1996 and rules and regulations made thereunder, the Board may, either suo moto or on receipt of any information or during pendency of any inspection, inquiry or investigation or on completion thereof, in the interest of public or trade or investors or the securities market, issue such directions as it deems fit, including but not limited to any or all of the following:─ (a) directing a person holding equity shares or rights over equity shares in a depository in contravention of these regulations to divest his holding, in such manner as may be specified in the direction; (b) directing transfer of any proceeds or securities to the Investor Protection Fund of a depository; 83 Inserted by the Securities and Exchange Board of India (Depositories and Participants) (Amendment) Regulations, 2023, w.e.f. 28-08-2023. Page 45 of 85 (c) debarring any depository, any shareholder of such depository, or any associate and agent of such shareholder, or any transferee of shares from such shareholder, or applicant(s), director(s) and key management personnel(s) of the depository from accessing the securities market and/or dealing in securities for such period as may be determined by the Board. (2) The Board may take action against a depository, director, committee member, key management personnel, employee or any other person associated with the depository, for any contravention or abetting the contravention of these regulations, including the Code of Conduct specified under these regulations, provision of the Act, the Depositories Act, 1996, or any rules or regulations framed thereunder and any circulars or directions issued by the Board, either upon a reference or suo motu, as it deems fit, including but not limited to any or all of the following:— (a) debarring a depository from introducing new products and services and restricting its existing activities, products and services, etc (b) imposing such monetary penalty as may be determined by the Board on the depository, directors, committee members, key management personnel, employees or any other person associated with the depository. (c) restricting any such person to attend meetings or otherwise participate or involve themselves in the functioning of the depository. Explanation– For the removal of any doubt, it is clarified that the power of the Board to take appropriate action under sub-regulation (2) is without prejudice to the exercise of its powers under the provisions of the Act, the Depositories Act, 1996, and the rules and regulations made thereunder: Provided that the Board while taking action under clauses (a) and (b) above shall have due regard to the factors, including but not limited to any or all of the following:- (i) a mala fide intent; or (ii) an act of commission or an act of omission; or (iii) negligence, or (iv) repeated instances of genuine decision making that went wrong. (3) While adjudging the quantum of monetary penalty under the Act, the Board shall have due regard to the factors, including but not limited to any or all of the following:— (a) the amount of disproportionate gain or unfair advantage, wherever quantifiable, made as a result of the default; (b) the amount of loss caused to the depository or the securities market as a result of the default; and Page 46 of 85 (c) the repetitive nature of the default.] CHAPTER X PROCEDURE FOR ACTION IN CASE OF DEFAULT Liability for action in case of default 92. Without prejudice to the power of the Board to take action, under the provisions of the Act and the Depositories Act, if a depository or a participant:- (a) contravenes any of the provisions of the Act, the Depositories Act, the bye-laws, agreements and these regulations; (b) fails to furnish any information relating to its activity as a depository or participant as required under these regulations; (c) does not furnish the information called for by the Board under clause (a) of sub-section (1) of section 18 of the Depositories Act or furnishes information which is false or misleading in any material particular; (d) does not co-operate in any inspection or investigation or enquiry conducted by the Board; (e) fails to comply with any direction of the Board issued under section 18 of the Depositories Act; (f) fails to pay the annual fee referred to in regulation 8, shall be dealt with in the manner provided under Chapter V of the Securities and Exchange Board of India (Intermediaries) Regulations, 2008. Liability for action in case of default by issuer or its agent 93. (1) If an issuer or its agent - (a) contravenes any of the provisions of the Depositories Act, the byelaws, agreements, these regulations and directions issued thereunder; (b) fails to furnish any information relating to its activity as an issuer as required under these regulations; (c) does not furnish the information called for by the Board under clause (a) of sub- section (1) of section 18 of the Depositories Act or furnishes information which is false or misleading in any material particular; (d) does not co-operate in any inspection or investigation or enquiry conducted by the Board; (e) fails to comply with any direction of the Board issued under section 18 of the Depositories Act, the Board may, without prejudice to any other action which it may take under the Act, take any action against such issuer or its agent under the Depositories Act. (2) The depository shall conduct inspection of the records of the issuers or agents, as the case may be to ensure that the records of dematerialised securities are reconciled with all the securities issued by the issuer and submit its report to the Board if there is failure by the issuers or agents in such reconciliation of records. Page 47 of 85 84[CHAPTER X-A POWER TO RELAX STRICT ENFORCEMENT OF THE REGULATIONS Exemption from enforcement of the regulations in special cases. 93A. (1) The Board may, exempt any person or class of persons from the operation of all or any of the provisions of these regulations for a period as may be specified but not exceeding twelve months, for furthering innovation 85[***] relating to testing new products, processes, services, business models, etc. in live environment of regulatory sandbox in the securities markets. (2) Any exemption granted by the Board under sub-regulation (1) shall be subject to the applicant satisfying such conditions as may be specified by the Board including conditions to be complied with on a continuous basis. Explanation. — For the purposes of these regulations, "regulatory sandbox" means a live testing environment where new products, processes, services, business models, etc. may be deployed on a limited set of eligible customers for a specified period of time, for furthering innovation in the securities market, subject to such conditions as may be specified by the Board.] CHAPTER XI MISCELLANEOUS 86[***] Power to remove difficulties 84 Inserted by the SEBI (Regulatory Sandbox) (Amendment) Regulations, 2020, w.e.f. 17-04-2020. 85 The words “in technological aspects” omitted by the SEBI (Regulatory Sandbox) (Amendment) Regulations, 2021, w.e.f. 03-08-2021. 86 Omitted by the Securities and Exchange Board of India (Depositories and Participants) (Amendment) Regulations, 2023, w.e.f. 28-08-2023. Prior to its omission regulations 94 and 95 read as under: Power to call for information 94. The Board may from time to time call for any information, documents or records from the depository or its governing board or any shareholder or applicant thereof and from depository participant. Directions by the Board 95. Without prejudice to exercise of its powers under the provisions of the Act, Depositories Act, 1996 and rules and regulations made thereunder, the Board may, either suo motu or on receipt of any information or during pendency of any inspection, inquiry or investigation or on completion thereof, in the interest of public or trade or investors or the securities market, issue such directions as it deems fit, including but not limited to any or all of the following:─ (a) directing a person holding equity shares or rights over equity shares in a depository in contravention of these regulations to divest his holding, in such manner as may be specified in the direction; (b) directing transfer of any proceeds or securities to the Investor Protection Fund of a depository; (c) debarring any depository, any shareholder of such depository, or any associate and agent of such shareholder, or any transferee of shares from such shareholder, or applicant(s), director(s) and key management personnel(s) of the depository from accessing the securities market and/or dealing in securities for such period as may be determined by the Board. Page 48 of 85 96. In order to remove any difficulties in the interpretation or application of the provisions of these regulations, the Board shall have the power to issue directions through guidance notes or circulars. 87[Power to relax the strict enforcement of the regulations. 96A (1) The Board may suo motu or upon an application made by a depository, for reasons recorded in writing, grant relaxation from the strict compliance of any of the provisions of these regulations subject to such conditions as the Board deems fit to impose in the interests of investors in securities and the securities market, if the Board is satisfied that : (a) the non-compliance is caused due to factors beyond the control of the entity; or (b) the requirement is procedural or technical in nature. (2)The depository making an application referred to under sub-regulation (1) shall pay a non-refundable fee of rupees one lakh payable by way of direct credit in the bank account through NEFT/ RTGS/ IMPS or online payment using the SEBI payment gateway or any other mode as may be specified by the Board from time to time.] Power to specify procedures, etc. and issue clarifications 97. For the purposes of implementation of these regulations and matters incidental thereto, the Board may specify norms, procedures, processes, manners or guidelines as specified in these regulations, by way of circulars. Repeal and savings 98. (1) On and from the commencement of these regulations, the Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996, shall stand repealed. (2)Notwithstanding such repeal, anything done or any action taken or purported to have been taken or contemplated under the repealed regulations before the commencement of these regulations shall be deemed to have been done or taken or commenced or contemplated under the corresponding provisions of these regulations. (3)After the repeal of the regulations referred to in sub-regulation (1), any reference thereto in any regulation, guideline, circular or direction issued by the Board shall be deemed to be a reference to the relevant provisions of these regulations. 87 Inserted by the Securities and Exchange Board of India (Depositories and Participants) (Amendment) Regulations, 2023, w.e.f. 28-08-2023 Page 49 of 85 FIRST SCHEDULE FORMS FORM A Securities and Exchange Board of India (Depositories and Participants) Regulations, 2018 [See regulation 3] Application for grant of certificate of registration as depository Securities and Exchange Board of India, C4-A, ‘G’ Block, Bandra-Kurla Complex, Bandra (East) Mumbai 400051 - India, INSTRUCTIONS i. This form is meant for use by each person acting as the applicant of a depository. ii. The applicant should complete this form, and submit it, along with all supporting documents to the Board at its head office at Mumbai. iii. This application form should be filled in accordance with the regulations. iv. Application for grant of certificate of registration as depository, will be considered provided it is complete in all respects. v. All answers must be typed. vi. Information which needs to be supplied in more detail may be given on separate sheets which should be attached to the application form. vii. The application must be signed and all signatures must be original. viii. The application must be accompanied by an application fee as specified in the Second Schedule to these regulations and by the draft bye-laws. ix. Every page of the form and every additional sheet must be initialed by the authorised signatory of the applicant. x. All copies of documents should be attested as true by an authorised notary. Items 1-6 pertain to an applicant 1. Name, address of the registered office, address for correspondence, telephone number(s), fax number(s), telex number(s) and the name of the contact person of the applicant. 2. Please indicate the name of the depository which is proposed to be established by the applicant. 3. Please indicate the names of other depositories, if any, which have been sponsored by the applicant, or in which the applicant is acting as participant. 4. Please indicate the category to which the applicant belongs as per regulation 6 read with sub- regulation (1) and (2) of regulation 21. 5. Please provide the following details of each applicant: (a) Date of incorporation or establishment, and the statute, if any, under which established (enclose certificate of incorporation, memorandum and articles of association or statutory provisions, if any). (b) Objects of the applicant. (c) Details of the nature of activities carried on by the applicant. Page 50 of 85 (d) Details of affiliates and subsidiaries, and activities carried on by them. (e) Details of registration with the Securities and Exchange Board of India, the Reserve Bank of India or with any foreign regulatory authority of the applicant, its affiliates and its subsidiaries (enclose documents supporting such registration). (f) Net worth of the applicant (enclose a copy of the latest audited financial statements). (g) Percentage and amount of the paid up capital of the proposed depository which the applicant is to hold. 6. Declaration statement (to be given as below) by each applicant. We hereby agree and declare that the information supplied in the application, including the attachment sheets, is complete and true. And we further agree that we will notify Securities and Exchange Board of India immediately any change in the information provided in the application. We further agree that we shall comply with, and be bound by the Securities and Exchange Board of India Act, 1992, and Securities and Exchange Board of India (Depositories and Participants) Regulations, 2018, and such other guidelines/instructions which may be announced by the Securities and Exchange Board of India from time to time. We further agree that as a condition of registration, we shall abide by such operational instructions/directives as may be issued by the Securities and Exchange Board of India from time to time. For and on behalf of............................................. (Name of the applicant) Authorised signatory.................. .......................... (Name) (Signature) Date: Place: Items 7-14 pertain to the depository, and should be filled in accordingly 7. Name, address of the registered office, address for correspondence, telephone number(s), fax number(s), telex number(s) and the name of the contact person of the applicant. 8. Date of incorporation of the depository (enclose certificate of incorporation and memorandum and articles of association) (a) Objects (main and ancillary) of the depository. (b) Authorised, issued, subscribed and paid-up capital of the depository. (c) Proposed net worth of the depository. (d) Details of proposed shareholding of each applicant. 9. The following details may be given for each director of the depository, and for its principal officer. (a) Name, age, nationality. (b) Details of educational and other qualifications. (c) Details of experience. Page 51 of 85 (d) Details of other directorships held. (e) Details of any litigation connected with the securities market which has an adverse bearing on the business of the depository, involving the director or principal officer, and details of any conviction of the director or principal officer for a crime involving moral turpitude or of any economic offence for which the director or principal officer has been found guilty. 10. Please indicate the details of staff and organisation structure that is proposed to be set- up prior to commencement of business. 11. Details of infrastructure such as premises and automatic data processing, storage and back up systems and procedures, communication systems that are proposed to be set-up prior to commencement of business. 12. Internal evaluation and monitoring systems that are proposed to be set-up prior to the commencement of business. 13. Arrangements for indemnification of beneficial owners that are proposed to be put in place, including details of insurance cover proposed to be taken prior to the commencement of business. 14. Declaration statement (to be given as below). We hereby agree and declare that the information supplied in the application including the attachment sheets, is complete and true. And we further agree that, we will notify Securities and Exchange Board of India immediately any change in the information provided in the application. We further agree that we shall comply with, and be bound by the Securities and Exchange Board of India Act, 1992, and Securities and Exchange Board of India (Depositories and Participants) Regulations, 2018, and such other guidelines/instructions which may be announced by the Securities and Exchange Board of India from time to time. We further agree that as a condition of registration, we shall abide by such operational instructions/directives as may be issued by the Securities and Exchange Board of India from time to time. For and on behalf of............................................................................................................................................ (Name of the applicant) Authorised signatory.......................... ............................... (Name) (Signature) Date: Place: Page 52 of 85 FORM B Securities and Exchange Board of India (Depositories and Participants) Regulations, 2018 [See regulation 7] Certificate of registration as depository I. In exercise of the powers conferred by sub-section (1A) of section 12 of the Securities and Exchange Board of India Act, 1992 (15 of 1992) read with the regulations made thereunder and with the Depositories Act, 1996 ( 22 of 1996) the Board hereby grants a certificate of registration to................................as a Depository subject to the conditions specified in the Act, the Depositories Act and the regulations made thereunder. II. Registration Number for the Depository is IN/SD/// Date : Place : Mumbai By Order Sd/- For and on behalf of the Securities and Exchange Board of India Page 53 of 85 FORM C Securities and Exchange Board of India (Depositories and Participants) Regulations, 2018 [See regulation 11] Application for grant of certificate of commencement of business as depository Securities and Exchange Board of India, C4-A, ‘G’ Block, Bandra-Kurla Complex, Bandra (East) Mumbai 400051 – India INSTRUCTIONS i. This form is meant for use by a depository granted a certificate of registration by the Securities and Exchange Board of India. ii. The applicant should complete this form, and submit it, along with all supporting documents to the Board at its head office at Mumbai. iii. This application form should be filled in accordance with the regulations. iv. Application for grant of certificate of commencement of business will be considered provided it is complete in all respects. v. All answers must be typed. vi. Information which needs to be supplied in more detail may be given on separate sheets which should be attached to the application form. vii. The application must be signed and all signatures must be original. viii. Every page of the form and every additional sheet must be initialled by the authorised signatory of the applicant. ix. All copies of documents should be attested as true by an authorised notary. 1. Name and registration number of the applicant. 2. Date of grant of certificate of registration to the applicant. 3. Please indicate whether bye-laws have been approved by the Board. 4. Please indicate the details of staff and organisation structure that has been set-up. 5. Please indicate the background and experience of key personnel. 6. Internal evaluation and monitoring systems including details of background and experience of personnel involved that have been set-up (enclose copies of risk management and operations manuals). 7. Please provide the following details of the automatic data processing and communications systems : (a) details of hardware, software and communications systems, their capability, function and location; (b) details of data storage and back up procedures and sites, their capability, function and location; (c) details of disaster recovery systems and procedures. Page 54 of 85 8. Please indicate whether premises and automatic data processing and communications systems are owned, leased or rented (enclose copies of title lease or rental agreements). 9. Please indicate arrangements that have been put in place in order to indemnify beneficial owners. 10. Please enclose copy of insurance cover that has been taken. 11. Please enclose a copy of the participation agreement to be entered into with different categories of participants. 12. Please enclose a copy of the agreement to be entered into with the issuer, or with the issuer and his registrar. 13. Please enclose a copy of the agreement to be entered into between the participant, as the depository’s agent, and the beneficial owners. 14. Declaration statement (to be given as below) : We hereby agree and declare that the information supplied in the application, including the attachment sheets, is complete and true. And we further agree that, we will notify the Securities and Exchange Board of India immediately of any change in the information provided in the application. We further agree that we shall comply with, and be bound by the Securities and Exchange Board of India Act, 1992, and the Securities and Exchange Board of India (Depositories and Participants) Regulations, 2018, and such other guidelines/instructions which may be announced by the Securities and Exchange Board of India from time to time. We further agree that as a condition of registration, we shall abide by such operational instructions/directives as may be issued by the Securities and Exchange Board of India from time to time. For and on behalf of............................................................................................................................................ (Name of the applicant) Authorised signatory.......................... ............................... (Name) (Signature) Date: Place: Page 55 of 85 FORM D Securities and Exchange Board of India (Depositories and Participants) Regulations, 2018 [See regulation 16] Certificate of commencement of business as depository In exercise of the powers conferred by section 3 of the Depositories Act, 1996 ( 22 of 1996) read with the regulations, the Board hereby grants a certificate of commencement of business to..............................................................as a depository subject to the conditions specified in the Act, the Depositories Act and the regulations made thereunder. Date: Place : Mumbai By order Sd/- For and on behalf of the Securities and Exchange Board of India Page 56 of 85 FORM E Securities and Exchange Board of India (Depositories and Participants) Regulations, 2018 [See regulation 22(2) and 22(3)] Application for grant of approval for acquisition of shares of a depository Securities and Exchange Board of India, C4-A, ‘G’ Block, Bandra-Kurla Complex, Bandra (East) Mumbai 400051 – India INSTRUCTIONS i. This form is meant for use by a person who acquires shares of a depository in terms of sub-regulation (2) or sub-regulation (3) of regulation (22). ii. The applicant should complete this form, and submit it, along with all supporting documents, if any to the Board through the depository concerned. iii. This application form should be filled in accordance with the regulations. iv. Application seeking approval will be considered provided it is complete in all respects. v. All answers must be typed. vi. Information which needs to be supplied in more detail may be given on separate sheets which should be attached to the application form. vii. The application must be signed and all signatures must be original. viii. Every page of the form and every additional sheet must be initialled by the applicant / authorised signatory of the applicant. 1. Name 2. Address 3. Details of employment/ business, if any 4. SEBI registration number, if any 5. Details of registration with other statutory authorities, 6. Declaration regarding the fulfillment of requirements of regulation 23 of these Regulations. 7. Details of action taken / penalties imposed on him by any statutory authority in India or abroad. 8. Details of activities that may, in the opinion of the shareholder, lead to his / its disqualification. 9. Association with depository participants 10. Cases pending before any Court, Tribunal or any other statutory authority in India or abroad, if any. 11. Previous approvals from the Board as fit and proper, if any. 12. Declaration statement (to be given as below) by each applicant. I / we hereby agree and declare that the information supplied in the application, including the attachment sheets, if any, is complete and true. Page 57 of 85 And I / we further agree that I / we will notify Securities and Exchange Board of India immediately any change in the information provided in the application. I / we further agree that we shall comply with, and be bound by the Securities and Exchange Board of India Act, 1992, and Securities and Exchange Board of India (Depositories and Participants) Regulations, 2018, and such other guidelines/instructions which may be announced by the Securities and Exchange Board of India from time to time. For and on behalf of............................................. (Name of the applicant) Authorised signatory.................. .......................... (Name) (Signature) Date: Place: Page 58 of 85 FORM F Securities and Exchange Board of India (Depositories and Participants) Regulations, 2018 [Regulation 32] Application for Grant of Certificate of Registration as Participant Securities and Exchange Board of India, C4-A, ‘G’ Block, Bandra-Kurla Complex, Bandra (East) Mumbai 400051 – India INSTRUCTIONS i. This form is meant for use by an applicant for grant of registration as participant. ii. The form should be filled in by the applicant and submitted to the depository in which it is acting as participant, who shall forward it, along with all supporting documents to the Board at its head office at Mumbai. iii. This application form should be filled in accordance with the regulations. iv. Application for grant of registration, as the case may be, will be considered provided it is complete in all respects. v. All answers must be typed. vi. Information which needs to be supplied in more detail may be given on separate sheets which should be attached to the application form. vii. The application must be signed and all signatures must be original. viii. The application must be accompanied by an application fee as specified in the Second Schedule to these regulations. ix. Every page of the form and every additional sheet must be initialed by the authorised signatory of the applicant. x. All copies of documents should be attested as true by an authorised notary. 1. Name, address of the registered office, address for correspondence, telephone number(s), fax number(s), telex number(s) of the applicant and the name of the contact person. 2. Please indicate to which of the categories under sub-regulation (a) of regulation 35, the applicant belongs. 3. (a) Date and place of incorporation or establishment and date of commencement of business (enclose certificate of incorporation, memorandum and articles of association or statutory provisions, if any). (b) Details of the activities carried on by the applicant, in India or overseas. (c) Details of affiliates and subsidiaries of the applicant operating in India, and activities carried on by them. (d) Details of registration with the Securities and Exchange Board of India, the Reserve Bank of India or with any regulatory authority overseas of the applicant, and of its affiliates and subsidiaries operating in India. Page 59 of 85 (e) Date of commencement of business in India and overseas (please enclose copies of the Reserve Bank of India’s permission, and if applicable copies of approvals from the Central Government to carry on activities mentioned above). (f) Type and number of beneficial owners on whose behalf the applicant proposes to act as participant (Financial Institutions, Mutual Funds, Foreign Portfolio Investors, Portfolio Managers, Non-Banking Finance Companies, Stock Brokers, Corporates, Individuals, or for own account). 4. Please give the name and SEBI registration number of the depository in which the applicant is to act as participant. 5. Please state whether the applicant, his partner, director or principal officer is involved in any litigation connected with the securities market which has an adverse bearing on the business of the applicant; or has at any time been convicted for any moral turpitude or at any time has been found guilty of any economic offence. 6. Please also state whether there has been any instance of violation or non-adherence to the securities laws, code of ethics/conduct, code of business rules, for which the applicant or its parent or holding company or affiliate may have been subject to economic, or criminal liability, or suspended from carrying out its operations, or the registration revoked temporarily. 7. Please indicate the net worth and paid-up capital in rupees crore as per the latest audited financial statements of the applicant. 8. Please indicate services that the applicant is already providing to beneficial owners on whose behalf the applicant proposes to act as participant, and services proposed to be provided to beneficial owners. 9. Please provide the following details regarding staff involved in activities as participant: (i) organisation structure; (ii) experience and background of key personnel. 10. Please provide the following details regarding safekeeping and security systems and procedures: (i) risk control and operations manuals; (ii) give details of independent internal control mechanisms for monitoring evaluation and review of accounting, and reporting systems and procedures. 11. Please provide the following details regarding automatic data processing systems and record keeping : (i) details of hardware, software and communications systems, their capability, function and location; (ii) details of data storage and back up procedures and sites, their capability, function and location; (iii) details of disaster recovery systems and procedures. 12. Details of insurance cover to be taken up. 13. Please indicate the applicant’s shareholding for each depository in which it has such shareholding and whether any shareholding is proposed to be acquired in the depository through which this application is being made. Page 60 of 85 14. Please enclose a copy of an undertaking from the depository in which the applicant is to act as participant that: (a) the applicant is eligible to act as participant in the depository through which this application is being submitted to the Board, and meets with the eligibility criteria for participants specified in these regulations and in the depository’s bye-laws; (b) the applicant has adequate automatic data processing systems, adequate and competent staff, risk management systems, procedures and manuals, disaster recovery procedures, secure data storage and off site back up facilities, adequate communications links and insurance; to enable the applicant to fulfil its obligations as participants to the satisfaction of the depository; and (c) the agreement to be entered into between the participant and beneficial owners has been submitted to the depository is in accordance with the depository’s bye-laws. 15. Declaration statement (to be given as below). We hereby agree and declare that the information supplied in the application, including the attachment sheets, is complete and true. And we further agree that, we will notify Securities and Exchange Board of India immediately any change in the information provided in the application. We further agree that we shall comply with, and be bound by the Securities and Exchange Board of India Act, 1992 and the Securities and Exchange Board of India (Depositories and Participants) Regulations, 2018, and such other guidelines/instructions which may be announced by the Securities and Exchange Board of India from time to time. We further agree that as a condition of registration, we shall abide by such operational instructions/directives as may be issued by the Securities and Exchange Board of India from time to time. For and on behalf of............................................................................................................................................ (Name of the applicant) Authorised signatory.......................... ............................... (Name) (Signature) Date: Place: Page 61 of 85 FORM G Securities and Exchange Board of India (Depositories and Participants) Regulations, 2018 [Regulation 36] Certificate of Registration as Participant I. In exercise of the powers conferred by sub-section (1A) of section 12 of the Securities and Exchange Board of India Act, 1992 (15 of 1992) read with the regulations made thereunder and with the Depositories Act, 1996 ( 22 of 1996) the Board hereby grants a certificate of registration to.................................................... ........................................... as a participant subject to the conditions specified in the Act, the Depositories Act and the regulations made thereunder. II. Registration Number for the participant is IN/DP/ / / III. This certificate of registration shall be valid, unless it is suspended or cancelled by the Board. Date: Place: Mumbai By order Sd/- For and on behalf of the Securities and Exchange Board of India Page 62 of 85 SECOND SCHEDULE [see regulations 3, 7, 8, 9, 32, 36] Securities and Exchange Board of India (Depositories and Participants) Regulations, 2018 PART A APPLICATION FEES, REGISTRATION FEES, ANNUAL CHARGE AND ANNUAL FEES Application fees payable by applicant (Rs.) 5,00,000 Application fees payable by participant (Rs.) 15,000 Registration fees payable by depository (Rs.) 1,00,00,000 Registration fees payable by participant (Rs.) 2,00,000 Annual fees payable by depository (Rs.) 50,00,000 Annual fees payable by participant Annual charges payable by depository (Rs.) 1,000 2% of annual custody charges collected by depositories from issuers PART B MANNER OF PAYMENT OF APPLICATION, REGISTRATION, ANNUAL CHARGE AND ANNUAL FEES Fees to be paid by Manner of payment 88[Applicant or depository By way of direct credit into the bank account through NEFT/RTGS/IMPS or online payment using the SEBI Payment Gateway or any other mode as may be specified by the Board from time to time.] 89[Participant Fees to be paid to the depository in which the payer is a Participant. The Depository shall forward the fees collected from participants to the Board, by way of direct credit in the bank account through online payment using SEBI payment gateway.] 88 Substituted by the SEBI (Payment of Fees and Mode of Payment) (Amendment) (Regulations) 2023 w.e.f. 01- 04-2023. Prior to substitution the clause read as “Applicant or depository By way of direct credit in the bank account through NEFT/RTGS/IMPS or any other mode allowed by RBI or demand draft or bankers cheque payable to the “Securities and Exchange Board of India” at Mumbai.” 89 Substituted by the SEBI (Payment of Fees and Mode of Payment) (Amendment) (Regulations) 2021 w.e.f. 05- 05-2021. Prior to substitution the clause read as: “Participant Fees to be paid to the depository in which the payer is a Participant. The Depository shall forward the fees collected from participants to the Board, by way of direct credit in the bank account through NEFT/RTGS/IMPS or any other mode allowed by RBI or by a demand draft or bankers cheque payable to the “Securities and Exchange Board of India” at Mumbai.” Page 63 of 85 PART C Securities and Exchange Board of India (Depositories and Participants) Regulations, 2018 [See regulation 25] 90[(I)] PROCEDURE FOR APPOINTMENT OF DIRECTORS 1. All directors while seeking approval shall submit to the depository the following details a. Name b. Address c. Educational qualification d. Details of employment/ Occupation, past and present e. Details of other directorships f. DIN No. g. Declaration regarding the fulfillment of requirements specified under regulation 23 of these Regulations. h. Declaration confirming compliance of Regulation 24(10) read with Regulation 2(1)(c) of these Regulations, in respect of non-association with trading member or clearing member. i. Details of regulatory action taken by any statutory authority in India. j. Details of activities that may in the opinion of the director, lead to his disqualification. k. Association, if any, with trading members/ depository participants. l. Disclosure of the names of his dependents associated with the securities market as member, depository participant, sub-broker, authorized person or holding any registration granted by the Board. m. An undertaking that he shall abide by the code of conduct and code of ethics prescribed in Part B and Part C of Third Schedule to these Regulations. n. In the case of public interest directors, consent letters for acting as a public interest director. o. Criminal cases completed/ pending before any authority in India or abroad, if any. 90 Inserted by the Securities and Exchange Board of India (Depositories and Participants) (Amendment) Regulations, 2019 w.e.f. 04-06-2019. Page 64 of 85 91[(2)The depository, while recommending the name(s) of director, shall forward the above details to the Board, along with the minutes of the governing board meeting where the name(s) was approved, copy of the shareholder's resolution (wherever applicable), and a confirmation by the depository that they are fit and proper persons in terms of their fit and proper criteria, are not associated with any depository participant, trading member or clearing member in terms of regulation 24(9) read with regulation 2 (1) (c) of these regulations and compliance with the requirements specified in regulation 24 (14) ] 92[(II)] Managing Director / Executive Director:- (1) The Nomination and Remuneration Committee of the Depository shall be responsible for selection of CEO /Managing Director / Executive Director, as the case may be. The managing director shall be selected through open advertisement in all editions of atleast one national daily from amongst persons qualified in the fields of capital market/ finance/ management and possessing sufficient experience. 93[The depository shall forward the new names to the Board before two months from the last working day of the existing Managing Director.] (2) In case a vacancy of managing director arises due to unforeseen reasons, the depository shall forward the new names to the Board within 60 days from the date of submission of resignation or such vacation of office. 94[(III)] Public Interest Directors:- 95[(1) The names of the public interest directors shall be forwarded to the Board after the approval of the governing board of the depository. The shareholders’ approval shall not be necessary. A minimum of two names shall be submitted to the Board for each vacancy of public interest directors, two months before such vacancy.] (2) The depository shall ensure that public interest directors are selected from diverse field of work. While deciding to propose a particular person as a public interest director, the depository shall also take into account the following factors: 91 Substituted by the Securities and Exchange Board of India (Depositories and Participants) (Amendment) Regulations, 2023, w.e.f. 28-08-2023. Prior to its substitution, sub-clause (2) read as under: “(2) The depository, while recommending the names of director, shall forward the above details to the Board, along with the minutes of the meeting of the governing board where the name was approved, copy of the shareholder's resolution (wherever applicable), a confirmation by the depository that the director is a fit and proper person in terms of the criteria specified in these regulations and are not associated with any depository participant, trading member or clearing member in terms of regulation 24(10) read with regulation 2(1)(c) of these Regulations.” 92 Inserted by the Securities and Exchange Board of India (Depositories and Participants) (Amendment) Regulations, 2019 w.e.f. 04-06-2019. 93 Inserted by the Securities and Exchange Board of India (Depositories and Participants) (Amendment) Regulations, 2019 w.e.f. 04-06-2019. 94 Inserted by the Securities and Exchange Board of India (Depositories and Participants) (Amendment) Regulations, 2019 w.e.f. 04-06-2019. 95 Substituted by the Securities and Exchange Board of India (Depositories and Participants) (Amendment) Regulations, 2023, w.e.f. 28-08-2023. Prior to its substitution, sub-clause (1) read as under: “ (1) The names of public interest directors shall be forwarded to the Board after the approval of the Board of the depository. The shareholders approval shall not be necessary. A minimum of two names shall be submitted to the Board for each vacancy of public interest directors.” Page 65 of 85 (a).96[ Qualifications as specified in regulation 24(14).] 97[***] (c) Persons currently holding positions of trust and responsibility in reputed organizations or person who have retired from such positions. (d) Persons who are likely to have interested positions in commercial contracts and financial affairs of depository may be excluded. Also, persons who are regular traders/speculators in the market or are director in the board of the applicant of the depository shall be excluded. (3) Public interest directors shall peruse the relevant laws, code of conduct, code of ethics, etc and submit an undertaking to the depository that they are aware of their role, responsibilities and obligations. 98[***] 99[(4) In case of reappointment of the public interest director, the depository shall apply to the Board four months before the expiry of the term. In addition to the other requirements specified herein, the application for reappointment of the public interest director shall be accompanied with, their attendance details on meetings of various mandatory committees and on the governing board of the depository, performance review and the reasons for extension of term.” (5) The existing public interest director, may continue holding the post for a maximum period of three months from the date of expiry of their term, or till a new public interest director is appointed, whichever is earlier, only if the governing board does not meet the mandatory regulatory requirements on its composition.] 96 Substituted by the Securities and Exchange Board of India (Depositories and Participants) (Amendment) Regulations, 2023, w.e.f. 28-08-2023. Prior to its substitution, item (a) read as under: “(a)Qualification in the area of law, finance, accounting, economics, management, administration or any other area relevant to the financial markets.” 97 Omitted by the Securities and Exchange Board of India (Depositories and Participants) (Amendment) Regulations, 2023, w.e.f. 28-08-2023. Prior to its omission, item (b) read as under: “(b) At least one person may be inducted having experience and background in finance/accounts who may preferably be inducted in the audit committee.” 98 Omitted the words “The depository may conduct familiarization programmes for newly appointed Public Interest Directors and may also conduct annual training for every public interest director.” by the Securities and Exchange Board of India (Depositories and Participants) (Amendment) Regulations, 2023, w.e.f. 28-08-2023. 99 Substituted by the Securities and Exchange Board of India (Depositories and Participants) (Amendment) Regulations, 2023, w.e.f. 28-08-2023. Prior to its substitution sub-clause (4) and (5) read as under: “(4) In case of extension of the term of the public interest director or appointment of a new public interest director, the depository shall apply to the Board two months before the expiry of the term. In addition to the other requirements prescribed herein, the application for extension of term of the public interest director shall be accompanied with, his attendance details on meetings of various committees and on the governing board of the stock exchange / clearing corporation, performance review and the reasons for extension of term. (5) The existing public interest director shall continue holding the post, till a new public interest director is appointed in his place.” Page 66 of 85 100[(IV)]101[Non-independent directors]:- (1) The names of person(s) to be appointed as 102[non-independent directors] shall first be approved by the governing board of the depository followed by shareholders’ approval before submitting the same to the Board for approval. 103[(2) The manner of election, appointment, tenure, resignation, vacation, etc. of a non- independent director shall be governed by the provisions applicable to shareholder directors under the Companies Act, 2013, save as otherwise specifically provided under these Regulations or circulars issued thereunder.] 104[(V)] General conditions on appointment of directors:- (1) The depository shall complete the appointment process within 30 days from Boards nomination/approval for directors and submit a compliance report within one week from the date of appointment. (2) In case any other official of the depository is appointed on the governing board in addition to the Managing Director, the same shall be subject to the approval of shareholders and the Board, in that order. 105[(VI.) The depository shall provide at least seven days of training to all directors each year.] PART D Securities and Exchange Board of India (Depositories and Participants) Regulations, 2018 [See regulation 28 (3)] Norms for compensation policy (1) Regulation 28 of these Regulations mandates that the compensation policy for key management personnel of depository shall be in accordance with the norms specified by the Board. The compensation norms, in this regard, shall be as follows:- 100 Inserted by the Securities and Exchange Board of India (Depositories and Participants) (Amendment) Regulations, 2019 w.e.f. 04-06-2019. 101 Substituted for the words “Share Holder Directors” by the Securities and Exchange Board of India (Depositories and Participants) (Amendment) Regulations, 2023, w.e.f. 28-08-2023. 102 Ibid. 103 Substituted by the Securities and Exchange Board of India (Depositories and Participants) (Amendment) Regulations, 2023, w.e.f. 28-08-2023. Prior to its substitution sub-clause (2) read as under: “(2) The manner of election, appointment, tenure, resignation, vacation, etc., of a shareholder director shall be governed by the Companies Act, 2013, save as otherwise specifically provided under these Regulations.” 104 Inserted by the Securities and Exchange Board of India (Depositories and Participants) (Amendment) Regulations, 2019 w.e.f. 04-06-2019. 105 Inserted by the Securities and Exchange Board of India (Depositories and Participants) (Amendment) Regulations, 2023, w.e.f. 28-08-2023. Page 67 of 85 a) The variable pay component shall 106[be within a range of 25% to 50% of total pay]. b) Fifty percent of the variable pay shall be paid on a deferred basis after 107[a minimum period of] three years. c) ESOPs and other equity linked instruments in the depository shall not be offered or provided as part of the compensation for the key management personnel. d) The compensation policy shall have malus and clawback arrangements. (2) Apart from the above, the compensation policy of the depository shall take into consideration the following: a) financial condition / health of the depository b) average levels of compensation payable to employees in similar ranks, c) shall not contain any provisions regarding incentives to take excessive risks over the short term, d) revenues, net profit of the depository, e) comparable to the industry standards, f) role and responsibilities of the key management personnel, g) periodic review (3) Further, at the time of seeking approval of the Board for the appointment of the managing director, the depository shall seek approval for the compensation of the managing director from the Board. PART E Securities and Exchange Board of India (Depositories and Participants) Regulations, 2018 [See regulation 22(10)] Monitoring of shareholding limits (1) In terms of sub-regulation (4) of regulation 22, the depository shall put in place a monitoring mechanism to ensure compliance with the shareholding restrictions prescribed in these Regulations at all times. Depository shall:- (a) Check the shareholding data on a periodic basis to ensure that the shareholding restrictions specified under Chapter IV of these regulations are complied with at all times. 106 Substituted for the words “not exceed one-third of total pay” by the Securities and Exchange Board of India (Depositories and Participants) (Amendment) Regulations, 2023, w.e.f. 28-08-2023 107 Inserted by the Securities and Exchange Board of India (Depositories and Participants) (Amendment) Regulations, 2023, w.e.f. 28-08-2023. Page 68 of 85 (b) Upon breach of shareholding limits, intimate the same to the Board within 7 days. (c) In case of listed depository, be guided by circular dated January 01, 2016 issued by the Board. Page 69 of 85 THIRD SCHEDULE Part-A Securities and Exchange Board of India (Depositories and Participants) Regulations, 2018 [See regulation 36] CODE OF CONDUCT FOR PARTICIPANTS 1. A participant shall make all efforts to protect the interests of investors. 2. A participant shall always endeavour to— (a) render the best possible advice to the clients having regard to the clients needs and the environments and his own professional skills; (b) ensure that all professional dealings are effected in a prompt, effective and efficient manner; (c) inquiries from investors are adequately dealt with; (d) grievances of investors are redressed without any delay. 3. A participant shall maintain high standards of integrity in all its dealings with its clients and other intermediaries, in the conduct of its business. 4. A participant shall be prompt and diligent in opening of a beneficial owner account, dispatch of the dematerialisation request form, rematerialisation request form and execution of debit instruction slip and in all the other activities undertaken by him on behalf of the beneficial owners. 5. A participant shall endeavour to resolve all the complaints against it or in respect of the activities carried out by it as quickly as possible, and not later than one month of receipt. 6. A participant shall not increase charges/fees for the services rendered without proper advance notice to the beneficial owners. 7. A participant shall not indulge in any unfair competition, which is likely to harm the interests of other participants or investors or is likely to place such other participants in a disadvantageous position while competing for or executing any assignment. 8. A participant shall not make any exaggerated statement whether oral or written to the clients either about its qualifications or capability to render certain services or about its achievements in regard to services rendered to other clients. 9. A participant shall not divulge to other clients, press or any other person any information about its clients which has come to its knowledge except with the approval/authorisation of the clients or when it is required to disclose the information under the requirements of any Act, Rules or Regulations. 10. A participant shall co-operate with the Board as and when required. 11. A participant shall maintain the required level of knowledge and competency and abide by the provisions of the Act, Rules, Regulations and circulars and directions issued by the Board. Page 70 of 85 The participant shall also comply with the award of the Ombudsman passed under the Securities and Exchange Board of India (Ombudsman) Regulations, 2003. 12. A participant shall not make any untrue statement or suppress any material fact in any documents, reports, papers or information furnished to the Board. 13. A participant shall not neglect or fail or refuse to submit to the Board or other agencies with which it is registered, such books, documents, correspondence, and papers or any part thereof as may be demanded/requested from time to time. 14. A participant shall ensure that the Board is promptly informed about any action, legal proceedings, etc., initiated against it in respect of material breach or non-compliance by it, of any law, Rules, regulations, directions of the Board or of any other regulatory body. 15. A participant shall maintain proper inward system for all types of mail received in all forms. 16. A participant shall follow the maker—Checker concept in all of its activities to ensure the accuracy of the data and as a mechanism to check unauthorised transaction. 17. A participant shall take adequate and necessary steps to ensure that continuity in data and record keeping is maintained and that the data or records are not lost or destroyed. It shall also ensure that for electronic records and data, up-to-date back up is always available with it. 18. A participant shall provide adequate freedom and powers to its compliance officer for the effective discharge of his duties. 19. A participant shall ensure that it has satisfactory internal control procedures in place as well as adequate financial and operational capabilities which can be reasonably expected to take care of any losses arising due to theft, fraud and other dishonest acts, professional misconduct or omissions. 20. A participant shall be responsible for the acts or omissions of its employees and agents in respect of the conduct of its business. 21. A participant shall ensure that the senior management, particularly decision makers have access to all relevant information about the business on a timely basis. 22. A participant shall ensure that good corporate policies and corporate governance are in place. 108[PART-B 108 Substituted by the Securities and Exchange Board of India (Depositories and Participants) (Amendment) Regulations, 2023, w.e.f. 28-08-2023. Prior to its substitution PART-B read as under: Part-B Securities and Exchange Board of India (Depositories and Participants) Regulations, 2018 [See regulation 27] CODE OF CONDUCT FOR DIRECTORS i. Meetings and minutes Every director of the depository shall: Page 71 of 85 a) not participate in discussions on any subject matter in which any conflict of interest exists or arises, whether pecuniary or otherwise, and in such cases the same shall be disclosed and recorded in the minutes of the meeting; b) not encourage the circulation of agenda papers during the meeting, unless circumstances so require; c) offer their comments on the draft minutes and ensure that the same are incorporated in the final minutes; d) insist on the minutes of the previous meeting being placed for approval in subsequent meeting; e) endeavour to have the date of next meeting fixed at each governing board meeting in consultation with other members of the governing board; f) endeavour that in case all the items of the agenda of a meeting were not covered for want of time, the next meeting is held within fifteen days for considering the remaining items. ii. Code of Conduct for the public interest directors a) In addition to the conditions stated in Para (i) above, public interest directors of the depository shall, endeavour to attend all the governing board meetings and they shall be liable to vacate office if they remain absent for three consecutive meetings of the governing board or do not attend seventy five percent of the total meetings of the governing board in a calendar year. b) Public interest directors shall meet separately, at least once in six months to exchange views on critical issues. iii. Strategic planning Every director of the depository shall: a) participate in the formulation and execution of strategies in the best interest of the depository and contribute towards pro-active decision making at the governing board level; b) give benefit of their experience and expertise to the depository and provide assistance in strategic planning and execution of decisions. iv. Regulatory compliances Every director of the depository shall: a) endeavour to ensure that the depository abides by all the provisions of the Securities and Exchange Board of India Act, 1992, Depositories Act, 1996, rules and regulations framed thereunder and the circulars, directions issued by the Board from time to time; b) endeavour compliance at all levels so that the regulatory system does not suffer any breaches; c) endeavour to ensure that the depository takes commensurate steps to honour the time limit prescribed by Board for corrective action; d) not support any decision in the meeting of the governing board which may adversely affect the interest of investors and shall report forthwith any such decision to the Board. v. General responsibility Every director of the depository shall: a) place priority for redressing investor grievances; b) endeavour to analyze and administer the depository issues with professional competence, fairness, impartiality, efficiency and effectiveness; c) submit the necessary disclosures/statement of holdings/dealings in securities as required by the depository from time to time as per their bye-laws or Articles of Association; d) unless otherwise required by law, maintain confidentiality and shall not divulge/disclose any information obtained in the discharge of their duty and no such information shall be used for personal gains; e) maintain the highest standards of personal integrity, truthfulness, honesty and fortitude in discharge of their duties in order to inspire public confidence and shall not engage in acts discreditable to their responsibilities; f) perform their duties in an independent and objective manner and avoid activities that may impair, or may appear to impair, their independence or objectivity or official duties; g) perform their duties with a positive attitude and constructively support open communication, creativity, dedication, and compassion; Page 72 of 85 [See Regulation 27] Code of Conduct for governing board, directors, committee members and key management personnel I. Governing Board The governing board of the depository shall – a) evaluate profitability margins of the depositories. b) ensure adequacy of resource allocation (both financial and human) towards regulatory compliances. c) focus on strategy, policy level issues and important matters and may review the day-to-day operational matters only in exceptional cases. d) oversee the critical operations including technology as well as the regulatory, risk management, compliance and investor grievance redressal functions of the depository. e) take the lead in succession planning for managing director and other key positions. f) play an active role in defining, establishing and documenting risk management framework, covering risk appetite or risk tolerance policy of the depository and ensure that the policy contains the following. i. role of risk appetite in key processes ii. clear quantitative metrics and thresholds to monitor performance of the depository’s risk appetite iii. acceptability of breaches and trigger response(s), if any. iv. zero tolerance for areas such as cyber security, system stability, surveillance, fair access, fraud or corruption, compliance, etc. g) make key stakeholders (executive and non-executive) aware of the use and value of risk appetite across the organization (including implications of breaches) and review and approve risk appetite metrics and thresholds periodically. h) ensure adequate independence of key functions such as regulatory and control functions (risk management, compliance and audit functions) such that; i.regulatory and control functions have sufficient stature to perform their tasks effectively. ii.regulatory and control functions operate independently and have appropriate direct access to the governing board of the depository and senior management. h) not engage in any act involving moral turpitude, dishonesty, fraud, deceit, or misrepresentation or any other act prejudicial to the administration of the depository.” Page 73 of 85 iii.control functions are proactively involved in all relevant decisions and activities. i) Provide for three lines of defense construct where: i.the first line of defense incorporates business units and support functions as it has the responsibility to own and manage risks associated with day to day operational activities. ii.the second line of defense comprises various oversight functions, i.e., regulatory, risk management and compliance teams, and iii.the third line of defense comprises the internal audit function. j) ensure that the roles and responsibilities of management in relation to three lines of defense are clearly specified and understood and that all employees are responsible for the regulatory, risk management and compliance outcomes. k) ensure a culture of effective communication and challenge (i.e., encourage alternate views or questions from individuals and groups) and value and respect it. l) ensure that any new product, service, revenue stream is examined by the concerned department of the depository from the compliance and risk management perspectives in addition to normal viability issues before approving the same. m) review periodically all existing products, services, revenue streams. n) shall meet, without the presence of the managing director and any other executive director, chief regulatory officer or compliance officer, the chief risk officer, the chief information security officer, the statutory auditor of the depository and any other person as determined by the public interest directors and non-independent directors to discuss important issues concerning the depository, on a periodic basis as specified by the Board. o) periodically review the frequency of meetings and agenda items of the governing board to ensure that the number of meetings is rationalized and all important issues are discussed. p) ensure that the agenda papers are approved by the chairman of the governing board. q) ensure that members of the governing board can place agenda item during their meeting. r) be responsible for monitoring compliance with the code of conduct by the members of the governing board of the depository. s) uphold a strong culture in the depository and promote the target culture from the top through behavior, actions and effective communication. t) communicate the guiding principles for institution’s target regulatory, compliance, risk and conduct culture. u) endeavor that the depository put in place key elements related to culture such as: Page 74 of 85 i. adequate training programs to help employees better understand expectations of behavior (for example, trainings on dilemmas); ii. mechanisms to measure and track indicators related to culture at regular intervals; iii. accountability mechanisms; and iv. performance management mechanisms which take into account adherence to culture, conduct and behavior related dimensions. II. Code of Conduct for Directors, Committee Members and key management personnel A. Applicable to directors, committee members and key management personnel of Depository: 1. General Responsibility. Every director, committee members and key management personnel of the depository shall— (a) analyse and administer the depositories’ issues with professional competence, fairness, impartiality, efficiency and effectiveness; (b) submit the necessary disclosures or statement of holdings or dealings in securities as required by the depository from time to time as per their Rules, Bye-laws or Articles of Association; (c) unless otherwise required by law, maintain confidentiality and not divulge or disclose any information obtained in the discharge of their duty and no such information is used for personal gains; (d) maintain the highest standards of personal integrity, truthfulness, honesty and fortitude in discharge of their duties in order to inspire public confidence and not engage in acts discreditable to their responsibilities; (e) perform their duties in an independent and objective manner and avoid activities that may impair, or may appear to impair, their independence or objectivity or official duties; (f) perform their duties with a positive attitude and constructively support open communication, creativity, dedication, and compassion; (g) not engage in any act involving moral turpitude, dishonesty, fraud, deceit, or misrepresentation or any other act prejudicial to the administration of the depository; (h) promote greater awareness and understanding of ethical responsibilities; (i) in the conduct of their business, observe high standards of commercial honour and; just and equitable principles of trade; (j) in their conduct in business life be exemplary which may set a standard for others; Page 75 of 85 (k) not use their position to give or get favours to or from the executive or administrative staff of the depository, technology or service providers and vendors or suppliers of the depository; (l) not commit any act which will put the reputation of the depository in jeopardy; (m) comply with the provisions of all applicable laws to the securities market; (n) directors and key management personnel shall at all point of time comply with all the internal policies of the depository including their code of conduct. If there is a conflict between the code of conduct policy of the depository with those provided by the Board, then the policy issued by the Board shall prevail. 2. Regulatory Compliances. Every director, committee member and key management personnel of the depository shall— (a) ensure that the depository abides by all the applicable provisions of the Act, the Depositories Act, 1996, rules and regulations framed thereunder and the circulars, directions or any other instructions issued by the Board from time to time; (b) ensure compliance at all levels so that the regulatory system does not suffer any breaches; (c) ensure that the depository takes steps commensurate to honour the time limit stipulated by Board for corrective action. 3. Disclosures of Beneficial Interest. All directors, committee members and key management personnel shall disclose to the governing board of depository, upon assuming office and during their tenure in office, whenever the following arises:— (a) any fiduciary relationship of self and family members and directorship/ partnership of self and family members in any trading member or clearing member or depository participant or registrar and transfer agent; (b) shareholding, in cases where the shareholding of the director/ key management personnel, directly or through his family exceeds 5 percent in any listed company or in other entities related to the securities markets; (c) any other business interests. 4. Access to Information. (a) There shall be prescribed channels through which information shall move and further there shall be audit trail of the same. Any retrieval of confidential documents or information shall be properly recorded. (b) All such information, especially which is non-public and price sensitive, shall be kept confidential and not be used for any personal consideration or gain. Page 76 of 85 (c) Any information relating to the business or operations of the depository, which may come to the knowledge of directors or committee members or key management personnel during performance of their duties shall be held in strict confidence, shall not be divulged to any third party and shall not be used in any manner except for the performance of their duties. (d) Directors shall call for information only as part of specific committees or as may be authorised by the governing board of depository. 5. Misuse of Position. Directors or committee members or key management personnel shall not use their position to obtain business or any pecuniary benefit in the organization for themselves or family members. B. Applicable to the Directors and Committee Members 1. Meetings and Minutes. The directors and committee members of the depository shall— (a) not participate in discussions on any subject matter in which any conflict of interest exists or arises, whether pecuniary or otherwise, and in such cases the same shall be disclosed and recorded in the minutes of the meeting; (b) not encourage the circulation of agenda papers during the meeting, unless circumstances so require; (c) ensure that minutes are recorded to capture all points of opinion comprehensively; (d) offer their comments on the draft minutes and ensure that the same are incorporated in the final minutes; (e) insist on the minutes of the previous meeting being placed for approval in subsequent meeting; (f) endeavor to have the date of next meeting fixed at each governing board meeting and committee meetings respectively in consultation with other respective members of the governing board and committees; (g) ensure that all important agendas placed before the governing board of depository and committees are deliberated in a timely manner; not support any decision in the meeting of the governing board of depository and the committees respectively which may adversely affect the interest of investors and shall report forthwith any such decision to the Board. Page 77 of 85 2. Role of the directors and committee members in the day to day functioning of the depository. (a) The directors and committee members shall not interfere in the day to day functioning of the depositories and shall limit their role to decision making on policy issues and to issues as the governing board of depository may decide. (b) The directors and committee members shall abstain from influencing the employees of the depositories in conducting their day to day activities. (c) The directors and committee members shall not be directly involved in the function of appointment and promotion of employees unless specifically so decided by the governing board of depository. 3. Avoidance of Conflict of Interest. (a) No Director or committee member of the depository shall participate in any decision making/adjudication in respect of any person/ matter in which he or she is in any way, directly or indirectly, concerned or interested. (b) Conflict of interest in a matter, if any, shall be decided by the governing board of the depository. 4. Strategic Planning. Every director and committee member of the depository shall— (a) participate in the formulation and execution of strategies in the best interest of the depository and contribute towards pro-active decision making at the governing board level; (b) give benefit of their experience and expertise to the depository and provide assistance in strategic planning and execution of decisions; (c) place priority for redressing investor grievances and encouraging fair trade practice so that the depository becomes an engine for the growth of the securities market. 5. Disclosure of dealings in securities by Directors of the Depositories. (a) All transactions or dealings in securities by the directors and their immediate relatives (as defined in Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015) shall be disclosed to the governing board of the depository. (b) All directors shall also disclose the trading conducted by firms or corporate entities in which they hold twenty percent or more beneficial interest or hold a controlling interest, to the depository. (c) The details including time period for disclosures stated above shall be provided by the depository, provided that the time period for disclosure shall not be later than fifteen days of the transaction/ dealing. Page 78 of 85 (d) Directors who are nominees of Government of India, its statutory bodies or Public Financial Institutions and are governed by their own codes shall be exempt from this requirement. C. Applicable to public interest directors (a) Public interest directors of the depositories shall endeavor to attend all the governing board meetings and they shall be liable to vacate office if they remain absent for three consecutive meetings of the governing board or do not attend seventy-five percent of the total meetings of the governing board in a calendar year. (b) Public interest directors shall meet separately, at least once in six months to exchange views on critical issues. Public interest directors shall submit a report of such meeting to the Board and to the governing board of the depository within the time and manner as may be specified by the Board from time to time. (c) Public interest directors shall identify important issues which may involve conflict of interest for the depository, or may have significant impact on the functioning of the depository, or may not be in the interest of securities market. The same shall be reported to the Board in a time bound manner as may be decided by the depository. (d) Public interest directors shall have regular oversight on regulatory requirements and observations of Board’s inspection particularly on issues of governance standards, technology and cyber security and system audit and cyber security audit observations. (e) Public interest directors should be proactive in identifying any issues concerning functioning of the depository and report the same to the Board. Public interest directors should ensure all regulatory communication or letter from the Board are placed before governing board with comments/report of managing director. (f) Public interest directors shall put in place an evaluation mechanism to assess the performance of managing directors on a continuing basis in line with evaluation guidelines for public interest directors. (g) Public interest directors shall ensure that appointments of managing director be held within specified timelines. Identification of key management personnel be closely scrutinized as per the laid down procedure and exceptions should be brought to the notice of the Board. (h) Public interest directors should take proactive part in deliberations of different committees and steer their functioning. (i) Adequacy of resource allocations (both financial & human) towards regulatory compliances to be ensured. Page 79 of 85 D. Applicable to Independent External Professionals (a) Independent External Professionals shall not use or act on any sensitive information received in capacity as a member of the statutory committee for obtaining any undue benefit. E. Applicable to key management personnel (a) Managing director of the depository shall meet employees without the presence of other key management personnel (the heads of departments) to discuss important issues pertaining to depository (b) Key management personnel of the depository shall disclose on a periodic basis as determined by the depository (which could be monthly), all their dealings in securities, directly or indirectly, to the governing board or regulatory oversight committee or Compliance Officer of depository. (c) All transactions must be of an investment nature and not speculative in nature. Towards this end, all securities purchased must be held for a minimum period of sixty days before they are sold. In specific/ exceptional circumstances, however, sale can be effected anytime by obtaining pre- clearance from the compliance officer to waive this condition after recording in writing his satisfaction in this regard. Explanation. - “securities” for the purpose of this code shall not include mutual fund units.] 109[***] 109 Omitted by the Securities and Exchange Board of India (Depositories and Participants) (Amendment) Regulations, 2023, w.e.f. 28-08-2023. Prior to its omission, PART-C shall be read as under: “Part-C Securities and Exchange Board of India (Depositories and Participants) Regulations, 2018 [See regulation 27] CODE OF ETHICS FOR DIRECTORS AND KEY MANAGEMENT PERSONNEL The ‘Code of Ethics’ for directors and key management personnel of the depository, is aimed at improving the professional and ethical standards in the functioning of depository thereby creating better investor confidence in the integrity of the securities market. i. Objectives and underlying principles The Code of Ethics for directors and key management personnel of the depository seeks to establish a minimum level of business/ professional ethics to be followed by these directors and key management personnel, towards establishing a fair and transparent marketplace. The Code of Ethics is based on the following fundamental principles:  Fairness and transparency in dealing with matters relating to the depository and the investors.  Compliance with all laws / rules / regulations laid down by regulatory agencies / depositories. Page 80 of 85  Exercising due diligence in the performance of duties.  Avoidance of conflict of interest between self-interest of directors/ key management personnel and interests of depository and investors. ii. Regulatory Oversight Committee For overseeing implementation of this Code, a regulatory oversight committee shall be constituted by every depository under the governing board. iii. General standards a) Directors and key management personnel shall endeavour to promote greater awareness and understanding of ethical responsibilities. b) Directors and key management personnel, in the conduct of their business shall observe high standards of commercial honour and just and equitable principles of trade. c) The conduct of directors and key management personnel in business life should be exemplary. d) Directors and key management personnel shall not use their position to give/get favours to/from the executive or administrative staff of the depository, suppliers of the depository, or any issuer company admitted to the depository. e) Directors and key management personnel shall not commit any act which will put the reputation of the depository, in jeopardy. f) Directors, committee members and key management personnel of the depository, shall comply with the provisions of all applicable law to the securities market. iv. Disclosure of dealings in securities by key management personnel of the depository a) Key management personnel of the depository shall disclose on a periodic basis as determined by the depository (which could be monthly), all their dealings in securities, directly or indirectly, to the governing board/regulatory oversight committee/ Compliance Officer. b) The dealings in securities shall also be subject to trading restrictions for securities about which key management personnel in the depository may have non-public price sensitive information. Requirement laid down under Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015 may be referred in this regard. c) All transactions must be of an investment nature and not speculative in nature. Towards this end, all securities purchased must be held for a minimum period of 60 days before they are sold. However, in specific/exceptional circumstances, sale can be effected anytime by obtaining pre-clearance from the Compliance Officer to waive this condition after recording in writing his satisfaction in this regard. Explanation: ‘securities’ for the purpose of this Code shall not include units of mutual fund. v. Disclosure of dealings in securities by directors of the depository a) All transactions in securities by the directors and their relatives shall be disclosed to the governing board of the depository. b) All directors shall also disclose the trading conducted by firms/corporate entities in which they hold twenty percent or more beneficial interest or hold a controlling interest, to the regulatory oversight committee. c) Directors who are Govt. of India nominees or nominees of Govt. of India statutory bodies or financial institutions and are governed by their own codes shall be exempt from this requirement. vi. Avoidance of conflict of interest a) No director of the governing board or member of any committee of the depository shall participate in any decision making/adjudication in respect of any person /matter in which he is in any way, directly or indirectly, concerned or interested. b) Whether there is any conflict of interest or not in a matter, shall be decided by the governing board. vii. Disclosures of beneficial interest Page 81 of 85 110[ PART-D All directors and key management personnel shall disclose to the governing board, upon assuming office and during their tenure in office, whenever the following arises:- a) any fiduciary relationship of self and family members and directorship/partnership of self and family members in any depository participant or registrar and transfer agent; b) shareholding, in cases where the shareholding of the director key management personnel, directly or through his family exceeds five percent in any listed company or in other entities related to the securities markets; c) any other business interests. viii. Role of the Chairman and directors in the day to day functioning of the depository a) The Chairman and directors shall not interfere in the day to day functioning of the depository and shall limit their role to decision making on policy issues and to issues as the governing board may decide. b) The Chairman and directors shall abstain from influencing the employees of the depository in conducting their day to day activities. c) The Chairman and directors shall not be directly involved in the function of appointment and promotion of employees unless specifically so decided by the governing board. ix. Access to information a) Directors shall call for information only as part of specific committees or as may be authorised by the governing board. b) There shall be prescribed channels through which information shall move and further there shall be audit trail of the same. Any retrieval of confidential documents/ information shall be properly recorded. c) All such information, especially which is non-public and price sensitive, shall be kept confidential and not be used for any personal consideration/ gain. d) Any information relating to the business/operations of the depository, which may come to the knowledge of directors/ key management personnel during performance of their duties shall be held in strict confidence, shall not be divulged to any third party and shall not be used in any manner except for the performance of their duties. x. Misuse of position Directors/committee members shall not use their position to obtain business or any pecuniary benefit in the organization for themselves or family members. xi. Regulatory oversight committee to lay down procedures a) The regulatory oversight committee shall lay down procedures for the implementation of the Code and prescribe reporting formats for the disclosures required under the Code. b) The Compliance Officer shall execute the requirements laid down by the regulatory oversight committee. While the objective of this Code is to enhance the level of market integrity and investor confidence, it is emphasized that a written Code of ethics may not completely guarantee adherence to high ethical standards. This can be accomplished only if directors and key management personnel of the depository commit themselves to the task of enhancing the fairness and integrity of the system in letter and spirit.” 110 Substituted by the Securities and Exchange Board of India (Depositories and Participants) (Amendment) Regulations, 2023, w.e.f. 28-08-2023. Prior to its substitution PART-D read as under: “Part-D Page 82 of 85 [See Regulation 17] Code of Conduct for Depositories A Depository shall: (a) always abide by the provisions of the Act, Depositories Act, 1996, any Rules or Regulations framed thereunder, circulars, guidelines and any other directions issued by the Board from time to time. (b) adopt appropriate due diligence measures. (c) take effective measures to ensure implementation of proper risk management framework and good governance practices. (d) take appropriate measures towards investor protection and education of investors. (e) treat all its applicants/members in a fair and transparent manner. (f) promptly inform the Board of violations of the provisions of the Act, the Depositories Act, 1996, rules, regulations, circulars, guidelines or any other directions by any of its issuer or issuer’s agent. (g) take a proactive and responsible attitude towards safeguarding the interests of investors, integrity of depository’s systems and the securities market. Securities and Exchange Board of India (Depositories and Participants) Regulations, 2018 [See regulation 17] CODE OF CONDUCT FOR DEPOSITORIES 1. A depository shall always abide by the provisions of the Act, Depositories Act, 1996, Rules, Regulations, circulars, guidelines and any other directions issued by the Board. 2. A depository shall take appropriate measures towards investor protection and education of investors. 3. A depository shall treat all its applicants/participants in a fair and transparent manner. 4. A depository shall promptly inform the Board of violations of the provisions of the Act, Depositories Act, the rules, the regulations, circulars, guidelines or any other directions by any of its participants, issuer or issuer’s agent. 5. A depository shall take a proactive and responsible attitude towards safeguarding the interests of investors, integrity of the depository system and the securities market. 6. A depository shall make endeavors for introduction of best business practices amongst itself and its participants. 7. A depository shall act in utmost good faith and shall avoid conflict of interest in the conduct of its functions. 8. A depository shall not indulge in unfair competition, which is likely to harm the interests of any other depository, participants or investors or is likely to place them in a disadvantageous position while competing for or executing any assignment. 9. A depository shall be responsible for the acts or omissions of its employees in respect of the conduct of its business. 10. A depository shall monitor the compliance of the rules and regulations by the participants and shall further ensure that their conduct is in a manner that will safeguard the interest of investors and the securities market.” Page 83 of 85 (h) endeavor for introduction of best business practices amongst itself and its members. (i) act in utmost good faith and shall avoid conflict of interest in the conduct of its functions. (j) not indulge in unfair competition, which is likely to harm the interests of any other Depository, their participants or investors or is likely to place them in a disadvantageous position while competing for or executing any assignment. (k) segregate roles and responsibilities of key management personnel within the depository including a. Clearly mapping legal and regulatory duties to the concerned position b. Defining delegation of powers to each position c. Assigning regulatory, risk management and compliance aspects to business and support teams (l) be responsible for the acts or omissions of its employees in respect of the conduct of its business. (m) monitor the compliance of the rules and regulations by the participants and shall further ensure that their conduct is in a manner that will safeguard the interest of investors and the securities market.] Page 84 of 85 111[ FOURTH SCHEDULE Securities and Exchange Board of India (Depositories and Participants) Regulations, 2018 See regulation 2(k)(iii) Core functions of the depository 1. For depositories the core and critical functions shall include but not limited to: a. Vertical 1: Critical Operations i. Provision for dematerialization of securities including holding and transfer of such securities; ii. Record keeping of information related to dematerialized securities; iii. IT infrastructure for core and critical functions; iv. Business continuity plan and disaster recovery operations; v. Cyber Security and cyber resilience framework. vi. b. Vertical 2: Regulatory, compliance, risk management and investor grievances. i. Risk management; 111 Substituted by the Securities and Exchange Board of India (Depositories and Participants) (Amendment) Regulations, 2023, w.e.f. 28-08-2023. Prior to its substitution Fourth Schedule read as under: “FOURTH SCHEDULE Securities and Exchange Board of India (Depositories and Participants) Regulations, 2018 [See regulation 29] MEASUSRES TO ENSURE AUTONOMY OF REGULATORY DEPARTMENTS In order to ensure the segregation of regulatory departments, every depository shall adopt a "Chinese Wall" policy which separates the regulatory departments of the depository from the other departments. The employees in the regulatory departments shall not communicate any information concerning regulatory activity to any one in other departments. The employees in regulatory areas may be physically segregated from employees in other departments including with respect to access controls. In exceptional circumstances employees from other departments may be given confidential information on "need to know" basis, under intimation to the Compliance Officer. For the purposes of the above, "regulatory areas" shall mean those departments of a depository which are mandated by law or those entrusted with regulatory powers and duties, and may include departments performing the following functions: (i) risk management; (ii) surveillance; (iii) participant registration; (iv) Issuer/ securities admission; (v) compliance; (vi) inspection; (vii) enforcement; (viii) arbitration; (ix) investor protection; (x) investor services. “ Page 85 of 85 ii. Surveillance and investigation; iii. Participant registration; iv. Issuer or securities admission; v. Compliance; vi. Inspection; vii. Enforcement; viii. Arbitration and grievance redressal mechanism; ix. Investor protection and services. c. Vertical 3: Other Functions including Business Development. i. Sales; ii. Marketing; iii. Product Development; iv. Finance.] Sd/- AJAY TYAGI CHAIRMAN SECURITIES AND EXCHANGE BOARD OF INDIA