Agreement between Depository and Participant

Agreement between Depository and Participant

A custodian also provides transaction-related services, acts as trustee and agent of the owner of the securities. Once the shares are submitted to the deposit account, their transfer would be regulated by the securities system, and its main function is to dematerialize the security and keep the accounting books. In India, a depositary participant (DDA) is called the depositary agent. They are the intermediaries between the depositary and the investors. The relationship between DPs and the depositary is governed by an agreement between the two under the Depositary Act. In the strictly legal sense, a DP is a company registered as such with SEBI in accordance with Article 12(1A) of the SEBI Act. According to the provisions of this law, a DP can only offer depositary-related services after receiving a registration certificate from SEBI. In 2012, 288 NSDL DPs and 563 CDSL DPs were registered with SEBI. [1] [2] In India, a depositary participant (DDA) is described as an intermediary or intermediary between the depositary and investors. There is an agreement under the Depositary Act that governs the relationship between the two, the depositary participants and the depositary.

A custodian is the most important part of the whole process as it is an electronic securities holding center and keeps an eye on the account registration transactions carried out by the participating depositor. There are several types of registration with the depositary when it comes to the transfer of securities: the investor, also known as the beneficial owner, is another party to the custody process; where he must open a Demat account with the help of a custodian participant in order to dematerialize his assets and transfer securities. Article 26 of the Depositaries and Participants Regulations 1996 (SEBI) provides that depositaries, participants, issuers and issuers, in addition to the rights and obligations set out in the Depositaries and Articles of Association Act, have the rights and obligations arising from the agreements they enter into. Section 12 (1A) of the Securities and Exchange Board of India Act 1992 provides that a depositary means a company incorporated and registered under the Companies Act 1956 to which a certificate of registration under the securities and exchange board of India, i.e. SEBI, has been issued. In the simplest sense, an issuer is a person who issues the securities deposited with the bank/custodian in a dematerialized form. Issuers can be corporations, mutual funds, domestic or foreign governments, etc. These issuers provide securities such as shares, bonds and warrants and are a legal entity that develops, registers and sells securities to finance its operations. In addition, Article 1(1)(j) defines the concept of `registered owner` as `depositary whose name is registered as such in the name of the issuer`. SeBI (D&P) Regulations, 1996, requires a minimum net worth of Rs.

50 lakh for securities dealers, R&T agents and non-bank financial corporations (NBFCs) to issue them a certificate of registration to act as PD. If a securities dealer seeks to act as a Dp in more than one depositary, he or she should separately meet the net asset test established for each of those custodians. No minimum net assets test was imposed for the other categories of DPs; However, depositaries may set a higher net asset criterion for their DPs. We humans are blessed by technology in the 21st century, and the “custody system” is one of those blessings where we can file our titles electronically. There was a time when investors received the physical certificates and had to keep them safe and pass them on to the next party. However, due to the innovation of the Depositaries Act of 1996, this paperwork is replaced by an electronic input method, widely known as the concept of dematerialization. A custody system usually involves four parties: Section 41 of the German Joint Stock Companies Act provides for two types of acquisition of a company membership, and the registration of a person`s name as a partner in the company`s register of partners is a condition precedent for a person to be considered a member of the company. However, in order to facilitate the recognition as members of the beneficial owner of the shares on whose behalf the depositary holds the shares, The new paragraph 3 of Article 41 provides that any person who holds the share capital of a company and whose name is registered as beneficial owner in the registers of a depositary shall be deemed to be a member of the company concerned. A depositary may conclude an agreement with one or more participants at the same time. All SPDs are the custodian`s agents; Any person may contact these depositary participants (DPs) and conclude an agreement through the Articles of Association and use the services of that depositary. .