THE CENTRAL DEPOSITORIES ACT, 2000

PART I - PRELIMINARY

1. This Act may be cited as the Central Depositories Act, 2000 and shall come into operation on such date as the Minister may, by notice in the Gazette, appoint and different dates may be appointed for different provisions.

2. (1) In this Act, unless the context otherwise requires - “Authority” means the Capital Markets Authority established under section 5 of the Capital Markets Authority Act; “central depository” means a company licensed by the Authority to establish and operate a system for the central handling of securities where dealings are effected without physical delivery of certificates.

PART II - CENTRAL DEPOSITORY

3. (1) No person shall establish, maintain or hold himself out as maintaining a central depository except with the prior written approval of the Authority.

4. (1) A company incorporated under the Companies Act which proposes to operate a central depository shall apply to the Authority in writing to be licensed as such.

4A. (1) The Authority shall, in determining whether a person is fit and proper, consider the financial status, qualifications, regulatory history, and competence of that person.

5. (1) The Authority may, in writing, license a company as a central depository if it is not contrary to the public interest and the company meets capital and infrastructure requirements.

5A. (1) A central depository shall make CDS Rules providing for the deposit, registration, transfer, and settlement of securities, and the management of its default process.

PART III - PROVISIONS RELATING TO IMMOBILISED SECURITIES

13. (1) A securities exchange may prescribe that any security listed or quoted on the exchange be immobilised by depositing such security with a central depository.

14. (1) A central depository may, after consultation with an issuer, prescribe an immobilised security as a dematerialised security in accordance with the CDS rules.

PART IV - SECURITIES ACCOUNTS AND RECORDS

30. (1) No person shall deal in book-entry securities unless such person holds a securities account.

31. (1) A central depository shall at the end of every financial year cause an audit to be conducted in respect of every record or account kept.

PART V - SECURITIES TRANSACTIONS, ENTRIES AND MISCELLANEOUS

34. (1) A transaction of a book-entry security by a depositor shall be evidenced or effected by means of an entry in the securities account of the depositor.

PART VI - SECRECY PROVISIONS

45. (1) No director, officer, employee or agent of a central depository shall disclose any information or document relating to the affairs of the depositors.

PART VII - OFFENCES AND PENALTIES

49. Falsification of records or accounts by a central depository or its agent is an offence punishable by fine or imprisonment.

PART VIII - INVESTIGATION

55. (1) The Authority may, at any time, if it considers there is sufficient reason, direct the production of records or accounts.

59A. (1) The Authority may, where it has reason to believe that an emergency exists, direct a central depository to take such action as it may consider necessary, including altering conditions of delivery or suspending rules.

PART VIII A - CENTRAL DEPOSITORY SETTLEMENT GUARANTEE ARRANGEMENTS

60A. (1) A central depository shall, as a condition to its licence, establish adequate arrangements to guarantee the settlement of all transactions relating to securities through its system.

PART IX - GENERAL

61. A central depository and its central depository agents shall preserve all records and accounts for a period of seven years.