(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.
(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 byelaws, agreements and these regulations ;
(c) 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 5 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.
(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 thirty 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 annual fee specified in Part A of the Second Schedule in the manner specified in Part B thereof.
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.
6 Procedure where certificate of registration is not granted