(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.
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 23
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.
24 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.