The Depositories Ordinance, 1995

REGISTERED No. DL-330C4\'5 ~ 0 ss l No, ~8) ,iljff(Qi(Oi EXTRAORDINARY '111T II_.. l PART II-Seeton 1 1ttfa.1~ ~ Sf~ PUBLISHED BY AUTHORITY ~ ~. ~. ~ 20, 1995/~ 29, 1917 NEW DELHI, WEDNESDAY) SEPTEMBER 20, 1995'BHADRA 29, 1917 1:t1 \t1't it mr,• on u 1'tm t oom"' q: ~ """"'""-~'"", 8o,date pacbis la pna to Cbla Part la onkr that U may be file4 as a ..,...te ~~ -1 MINISTRY OF LAW, JUSTICE AND COMPANY AFFAIRS (Legislative Department) New Delhi, the 20th September, 1995/Bhadra 29, 1917 (Saka) THE DEPOSITORIES ORDINANCE, 1995 No. 11 OF 1995 • ' Promulgated by the President in the Forty-six.th Year of the Republic of India. An Ordinance to provide for regulation of depositories in securities and for matters connected therewith or incidental thereto. WHEREAS Parliament is not in session and the President is satisfied that circumstances exist which render it necessary for him to take immediate action; Now, THEREFORE, in exercise of the powers conferred by clause (1) of article 123 of the Constitution, the President is pleased to promulgate the following Ordinance:- CHAPTER I PRELIMINARY 1. (1) This Ordinance may be called the Depositories Ordinance, 1995. (2) It extends to the whole of India. (3) It shall come into force at once. Short title, extent and commence­ ment. .- '· Certificate of commence­ ment of busi­ ness by de­ positories. • Agreement between de-. -, pos1tory and participant. nlE OAW-'i'l~'E OF INDIA SXT~ORDINARY (PART 11- 7 . unless the context otherwise requires,- 2. ( 1) In this Ordinance' • • _, . . . ,, mearts a person whosc't,ltame as recorded as such (a) •iBenef1c1al owner · with a depository; . ,, Securities ai1d Exchange Board of India established (b) ·'~oard3 fmethansSecurities and Exchange Board of India Act, 1992· under section o e . . ' I ,, eans bye-Jaws n1ade by a depository under section 26· ( c) ''bye- a~s m , ''Company Law Board'' means the Board of _Company La~ Administra. (cl) . d •. der section lOE of the Companies Act, 1956, tion constitute un ) ''d ·tory'' means a con1pany formed and registered under the (e epos1 d ·t· f · Companies Act, l956 and which has been grantc .. a cerdtr rEcatch o regB1st1·atio11 under sub-section (lA) of section 12 of the Securities an xc angc oard of India Act, 1992; (/) ''issuer', means any person making an issue of securities; (g) ''participant''· n1cans a perso11 registered as sucl1 unde~ s 1 ub-scctio,1 ( JA) of section 12 of the Securities and Excl1angc Board of India Act, 1992; (h) ''prescribed'' 1neans prescribed by rules n1ade under this Ordinance; (i) ''record'' includes the records n1aintained in the for?1 of books or stored in a computer or in such other form as may be determined by regulations; (j) ''registered owner'' means a depository whose name is entered as such in the register of the issuer; (k) ''regulations'' means regulations made by the Board; (I) ''security,, means such security as may be specified by the Board; (m) ''service'' means any se1vice connected with recording of allotment of securities or transfer of ownership of securities in the record of a depository. (2) Wprds and expressions used herein and not defined but defined in the Companies Act, 1956 or the Securities Contracts (Regulation) Act, 1956 or the Securities and Exchange Board of India Act, 1992, shall have the meanings respectively assigned to them i~ those Acts. CHAPTER II CERTIFICATE OF COMMENCEMENT OF BUSINESS '3. (1) No depository shall act as a depository unless it obtains a certificate of commencement of business from the Board. (2) A certificate granted under sub-section (1) shall be in such form as may be specified by the regulations. • (3) The Board shall not grant a certificate under_ sub-section (J) unless it is satisfied that the depository has adequate systems ·and safeguards to prevent manipulation of records and transactions: ProvideQ that no certificaie shall be refused under this section unless the depository concern~d h.as been given a reasonable oppo~nity of being heard. CHAPTER III RIGKl'S AND OBLIGATIONS OF DEPOSITORIES, PARTICIPANTS, ISSUERS AND BENE~­ CIAL OWNERS 4. __ (1) A d~pository shall enter into an agreement with one or more part1c1pants as 1ts agent. (2~ _Every agreement under sub--section (J) shall be in such form as may be specified by the bye--laws. a 15 of 1 ' 1 of 1956 15 of 19 :' 15 of 1 ,. •· 1 of 1956, 42 of 195!. 15 of I : 0 . . ' . •I. ~ • . :.1 .. • ·;;.', . ...,. . ... ·_:... . • .. , f " • • • :. • . •) . . ·~ • ' . . . : ~ ­ ~ t~ . ,< ~-~ ,."' • \ t '.~ l of 1956 ' 1 of 1956 _fSEc. l) nm GAZE"M-1, • IC OF INDJA E\M-n . ~ • IV\ORDINARY -- - 3 S. Any person form as may be ' th r?ugh a participant . . spec:r:.rd by th , may enter mto an agreement in such services. ' e bye-law • h d · ' • , _s, wit any epos1tory for availing its 6. (1) Any person who h surre~der the certificate of ;s e~tered into an agreement under section 5 shall depository, to the issuer in cuhnty, for which he seeks to avail the services of a sue manne • (2) The issuer on r . _ r as may be specified by the regulations. ' ece1pt of C 'f' cancel I the certificate of , erti icate of security under sub-section (J) shall depos·t security and s b • · • ' ~ ory as a registered O - . u stitute m its records the name of the depository accordingly . wner m respect of that security and inform the (3) A depository shall . the name of the perso' on rfeceipt of information under sub-section (2) enter b fi • 1 n re erred • b . • ene 1c1a owner. m su -sectmn (1) in its records, as the 1: (1) Every depository shall o . - . . . register the transfer of securit ' . n receipt of tnhmation from a participant, (2) If a benefi • 1 y m the name of the transferee. cia owner or a t f of such security the dep . rans eree of any security seeks to have custody . ository shall inform the issuer accordingly. 8• (1) Every person subscribi . . the option either to rece· h ng to s~cuntte~ _offered by an issuer shall have depository. ive t e security certificates or hold securities with a (2) Where a person opts to h Id . intimate such deposito ~ d O . a security with a depository, the issuer shall of such information t~y d e ~tads of allotment of the security, and on receipt allottee as the ben f ~ 1 epository shall enter in its records the name of the e icia owner of that security. . 9 f· (J)_bAIII sfecurities held by a depository shall be dematerialised and shall be m a ung1 e orm. (2) N~thing contained in sections 153, 153A, 153B, 187B, 187C and 372 of the Compames Act, 1956 shall apply to the securities held by a depository on behalf of the beneficial owners. 10. (J) Notwithstanding anything contained in any other law for the time­ being in force, a depository shall be deemed to be the registered owner for the purposes of effecting transfer of ownershipl'of security on behalf of a beneficial owner. (2) Save as otherwise provided in sub-section (1), the depository as a registered owner shall not have any voting rights or any other rights in respect of securities held by , it. (3) The beneficial owner shall be entitled to all the rights and benefits and be subjected to all the liabilities in respect of his securities held by a depository. 11. Every depository shall maintain a register and an index of beneficial owners in the manner provided in section 150, section 151 and section 152 of the Companies Act, 1956. 12. (J) Subject to such regulations and bye-laws, as may be made in_ this behalf, a beneficial owner may with the previous a~proval of the . depository create a pledge or hypothecation in respect of a secunty owned by him through a depository. Services of depository. Surrender of certificate of security. Registration of transfer of securities with de- pository. Options to receive sec­ urity certifi­ cate or hold securities with pository. de- ◄ Securities in depositories to be in fungible form. Rights of de· positories and benefi­ cial owner. Register of beneficial owner. Pledge or hy­ pothecation of securities held in a de­ pository. Furnishing of information and records by depository and issuer. Option to opt out in re­ spect of any security. Bankers' • Books Evi­ dence Act to apply to de­ p~sitories. Depositories to indemnify loss in certain cases. ~E GAZEITE OF INDIA EXTRAORDINARY (PART II-: (2) Every beneficial owner shall give intimation of such pledge or hypotheca­ tion to the depository ani such depository shall thcreup.on make entries in its records accordingly. • (3) Any entry in the records of a_ depository under sub-section (2) shall be evidence of a pledge or hypothecat1on. 13. (J) Every depository shall furnish to the issuer information about the transfer of securities in the name of beneficial owners at such intervals and in such manner as may be specified by the bye-Jaws. (2) Every issuer shall make available to the depository copies of the relevant records in respect of securities held by such depository. 14. (J) lf a beneficial owner seeks to opt out of a depository in respect of any security he shall inform the depository accordingly. (2) The depository shall on receipt of intimation under sub-section (1) make appropriate entries in its records and shall inform the issuer. (3) Every issuer shall within thirty days of the receipt of intimation from the depository and on fulfilment of such conditions and on payment of such fees as may be specified by the regulations issue the certificate of securities to the beneficial owner or the transferee as the case may be. 15. The Bankers' Books Evidence Act, 1891 shall apply in relation to a depository as if it were a bank as defined in section 2 of that Act. 16. (1) Without prejudice to the provisions of any other law for the time being in force, any loss caused to the beneficial owner due to the negligence of the depository or the participant, the depository shall indemnify such owner. (2) Where the loss due to the m:gligence of the participant under sub­ section (1) is indemnified by the depository shall have the right to recover the same from such participant. Rights and obligations of depositories etc. 17. (1) Subject to the provisions of this Ordinance the rights and obligations of the depositories, participants and the issuers whose securities are dealt with by a depository shall be specified by the regulations. Power of Board to call for informa­ tion and en­ quiry. (2) The eligibility criteria for admission of securities into the depository shall be specified by the regulations. CHAPTER IV ENQUIRY AND . INSPECTION 18. (1) The Board on being satisfied that it is necessary in the public interest or in the interest of investors so to do, may by order in writing,- (a) call upon any issuer, depository, participant or beneficial owner to furnish in writing such' information relating to the securities held in a depository as it may require; or (b) authorise any person to make an enquiry or inspection in relation to the affairs of the issuer, beneficial owner, depository or participant, who shall submit a report of such enquiry or inspection to it within such period as may be specified in the order. 18 of 1891 .SE'::,_ ll nm GAZETTE. OF INDIA EXTRAORDINARY s (~) Every ~irector, manager, partner, secretary, officer or employee of the depository or issuer or _the ,participant or beneficial owner shall on demand produce . before the person making the enquiry or inspection all information or such records and oth~r decu~ents in his custody having a bearing on the subject matter of such enquiry or mspection. • 19, Save a_s provi~cd in_ this Ordinance, if after making or causing to be. made an enquiry or mspcctton, the Board is satisfied that it is necessary- (i) in the interest of investors, or orderly development of securities market; or (ii) to . prevent the affairs of any depository or participant being conducted m the manner detrimental to the interests of investors or securities market, it may issue such directions,- (~~ to any depository or participant or any person associated with the secunttes market; or (b) to any issuer, as may be appropriate in the interest of investors or the securities market. CHAPTER V PENALTY Power of Board to give direction in certain cases. 20. Whoever contravenes or attempts to contravene or abets the contraven- Offences. tion of the provisions of this Ordinance or any regulations or bye-laws made thereunder shall be punishable with imprisonment for a term which may extend to five years or with a fine, or with both. 21. (1) Where an offence under this Ordinance has been committed by a Offences by company, every person who at the time the offence was committed was in companies. charge of, and was responsible to, the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly: Provided that nothing contained in this sub-section shall render any such person liable to any punishment provided in this Ordinance, if he proves that the offence was committed without his knowled_ge or that he had exercised all due diligence to prevent the commission of such offence. (2) Notwithstanding any\hing contained in sub-section (1), where an offence under this Ordinance has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or, is attributable to any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of the offence and shall be liable to be proceeded !1gainst and punished accordin~ly. . Explanation.-For the purposes of this sect1on,- (a) "Company" means any body corporate and 'inefudes a firm or other association of individuals; ando (b) "director", in relation to a firm, means a partner in the firm. CHAPTER VI MISCELLANEOUS 22. (1) No court shall take cognizance of any offence punishable under t~is Ordinance or any regulations or bye-laws made thereunder, save on a complamt . made by the Board. Cognizance of offences by courts . Appeals. Power of Central Government to mak4. rules. Power of Board to make regula­ tions. 6 THE GAZETTE OF INDIA EXTRAORDINARY [PART II- (2) No . court inferior to that of a Metropolitan Magi~trate or a Judicial Magistrate of the first class shall try any offence punishable under this Ordinance. • 23. (1) Any -person aggrieved by an order of the Board · made under this Ordinance, or the regull!tions made· thereunder may pre!er an appeal to the Central Government within such time as may be prescnbed. (2) No appeal shall be admitted if it is preferred after the expiry of the • 1 period prescribed therefor: Provided that an appeal may be admitted after the expiry of the period prescribed therefor if the appellant satisfies the Central Government that he had sufficient cause for not preferring the appeal within the prescribed period. (3) Every appeal made under this section shall be made in such form and shall be accompanied by a copy of the order appealed against and by such fees es may be prescribed. (4) The procedure for disposing of an appeal shall be such as may be prescribed: Provided that before disposing of an appeal, the appellant shall be given a reasonable opportunity of being heard. 24. (1) The Central Government may, by notification in the Official Gazette, make rules for carrying out the provisions of this Ordinance., (2) In particular, and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters, namely:- (a) the time within which an appeal may be preferred under sub­ section (]) of section 23; (b) the form in which an appeal may be preferred, under sub-section (3) of section 23 and the fees payable in respect .of such appeal; (c) the procedure for disposing of an appeal under sub-section (4) of section 23. 25. (1) Without prejudice to the provisions of section 30 of the Securities I I ( and Exchange/Board of India Act, 1992, the Board may by notification in the Official Gazette, make regulations consistent with the provisions of this Ordinance and the rules made thereunder to carry out the purposes of this Ordinance. 15 of 19 ! 1 ~' (2) In particular, and without prejudice to the generality of the foregoing power, such regulations may provide for- (a) any other form in which record is to be maintained under clause (i) of section 2; (b) the form in which the certificate of commencement of business shall be issued under sub-section (2) of section 3; (c) the manner in which the certificate of security shall be surrendered under sub-section (1) of section 6; · I I } ! I I I ' l . I i l Sec. ti 1ltE GA,,......... -----. ___ ...._, 1 r. OF INDIA EXTRAORDINARY 1 , (~) the manner of creatin;~ pledge or hypothecation in respect of security owned by a _beneficial owner under sub-section (1) of section 12; .f(e) the conditions and the fee payable with respec, to the issue of cert, 1cate of se ·r · cun ics under sub-section (3) of section 14; . (/) thc rights and obligations of the depositories, participants and the issuers under sub-section (I) of section 17; ( ) th 1· 'b•1· ' g e e •~1 1 ity criteria for admission of securities into the depository under sub-section (2) of section 17_ 26. (1) A_ deposit~ry shall, with the previous approval of the Board, make­ bye-laws conststent With the provisions of this Ordinance and the regulations. (2) In particular, and without prejudice to the generality of the foregoing power, such bye-laws shall provide for- (~) the eligibility criteria for admission and removal of securities in the depository; (b) the conditions subject to which the securities shall be dealt with; (c) the eligibility criteria for admission of any person as a participant; (d) the manner and procedure for dematerialisation of securities; (e) the procedure. for transactions within the depository; (f) the manner in which securities shall be dealt with or withdrawn from a depository; (g) the procedure for ensuring safeguards to protect the interests of participants and beneficial owners; • (h) the conditions of admission into and withdrawal from a participant by a beneficial owners; (i) the procedure for conveying information to the participants and beneficial owners on dividend declaration, shareholder meetings and other matters of interest to the beneficial owners; (j) the manner of distribution of dividends, interest and monetary benefits received from the company among beneficial owners; • (k) the manner of creating pledge or hypothecation in respect of securities held with a depository; (l) inter-se rights and obligations among the depository, issuer, participants, and beneficial owners; (m) the manner and the periodicity of furnishing information to the Board, issuer and other persons; (n) the procedure for resolving disputes involving depository, issuer, company or a beneficial owners; (o) the procedure for proceed!n_g against the p~rticipant com~itting breach of the regulations and prov1s10ns for s~spens1on and expulsion of participants from the depository and cancellation of agreements entered with the depository; (p) the internal control standards incHuding . procedure for auditing, reviewing and monitoring. / P~wer of de­ positories to make bye­ laws. 8 TI-IE GAZETTE OF INDIA EXTRAORDINARY (PART 11- (3) Where the Board considers it expedient so to do, it may, by order in writing, direct a depository to make an~ bye-la_ws or to a°!en~ or ~evoke any bye-laws already made within such period as it ma)' specify m this behalf. (4) If the depository fails or neglects to comply with such order within the specified period, the Board may m~~e t~e bye-laws or am~nd or revoke_ the bye­ laws made either in the form spcc1f1ed m the order or with such modifications thereof as the Board thinks fit. Rules and - 27. Every rule and every regulation made under this Ordinance shall be regulations laid, as soon as m'ay be after it is made, before each House of Parliament, while to be laid be- it is in session, for a total period of thirty days which may be comprised in one fore Parlia- session or in two or more successive sessions, and if, before the expiry of the ment. sessions immediatley following the session or the successive sessions aforesaid both Houses agree in making any modification in the rule or regulation or both Houses agree 1that the rule or regulations should not be made, the rule or regulation shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule or regulation. Application 28. The Provisions of this Ordinance shall be in addition to, and not, in ( of other laws derogation of, any other law for the time being in force r~lating to the holding not barred. and transfer of securities. Removal of difficulties. Amendments to certain enactments. Securities not liable to stamp duty. 29. (1) If any difficulty arises in giving effect to the provisions of this Ordinance, the Central government may by order published in the Official Gazette, make such provisions not inconsistent with the provisions of this Ordinance as appear to it to be necessary or expedient for removing the difficulty: Provided that no order shall be made under this section after the expiry of a period of two )'Cars from the commencement of this Ordinance. (2) Every order made under this section shall be laid, as soon as may be after it is made, before each House of Parliament. 30. The enactments specified in the Schedule to this Ordinance shall be amended in the manner provided therein . THE SCHEDULE (See section 30) AMENDMENTS TO CERTAIN ENACTMENTS PART I AMENDMENT To THE INDIAN STAMP .Acr, 1899 (2 OF 1899) AMENDMENT After section 8, the following section shall b • e mserted, namely:- '8A. Notwithstanding anything eontain~d in this Act _ ' (~) ?n issuer, by the issue of securities to one or more depohsitones shall, in respect of such issue, be chargeable with duty on t e total amount of se ·t • d b . b cun Y issue y It and such securities need not e stamped: r !E;· }I 11-IE GAZETTE OF INDIA EXTRAORDINARY 9 • (b) wh~re an issuer issues :ertificate of security under sub-section ( 3 ) _of sect19n 14 of the Depositories Ordinance, 1995, on such cert~ficate duty shall be_ payable as is payable on the issue of duplicate certificate under this Act· (~) transfer of registe;ed ownership of shares from a person to a depository or from a depository to a beneficial owner shall riot be liable to any stamp duty; • (d) the transfer of beneficial ownership of shares, such shares ~cmg shares of a company dealt with by a depository shall not be hablc to duty under article 62 of Schedule I of this Act. E~p!anation.- For the purposes of this section the expressions "ben~ficial owner", "depository", "issued" and "records" shall have the meanmgs re~pectivcly assigned to them in clause (a), clause (e), clause (f) and clause (i) of sub-section (J) Of section 2 of the Depositories Ordinance 1995.'. , PART II AMENDMENTS TO THE COMPANIES A~, 1956 (1 OF 1956) AMENDMENTS 1. In section 2, after clause (45A), the follo.wing clause shall be inserted, namely:- "(45B) 'Securities and Exchange Board of India' means the Securities and Exchange Board of India established under section 3 of the Securities and Exchange Board of India Act, 1992.'_'. 2. After section 2, the following section shall be inserted, namely:­ "2A. words and expressions used and not defined in this Act but defined in the Depositories Ordinance, 1995 shall have the same meaning respectively assigned to them in that Ordinance.". 3. In section 41, after sub-section (2), the following sub-section shall be inser~. namely:- "(3) Every person holding equity share capital of company and whose name is entered as beneficial owner in the records of the depository shall be deemed to be a member of the concerned company.". 4. In section 49, in sub-section (5), after clause (b), the following clause shall be inserted, namely:- "( c) from holding investments in th~ ?ame of a depository when such investment are in the form of securities held by the co~pany as a beneficial owner.". 5. In section 51, the following proviso shall be inserted, namely:­ "Provided that where the securities are held in a depository, the cords of the beneficial ownership may be served by s.uch depository ~: the company by means of electronic mode or by delivery of •floppies or discs.". 6. Section 83 shall be omitted. I 10 THE GAZETTE OF INDIA EXTRAORDINARY [PAkT JI- 7. In section 108, after sub-section (2), the following sub-section shall be inserted, namely:- "(3) Nothing contained in this section shall apply to transfer of security effecte<J by the transferor _and the transferee both o~ whom are entered as beneficial owners 111 the records of a depository.". 8. In section 111. after sub-section (13), the following sub-section shall be inserted, namcly:- "(14) In this section ·company' means a private company and incluacs a private company which had become a public company by virtue of section 43A of the Companies Act, 1956. ". 9. After section 111, the following section shall be inserted, namely:- "lllA. (1) In this section, unless the context otherwise requires, •ct,mpany' means a company other than a company referred to in sub-section (14) of section 111 of this Act. (2) Subject to the provisions of this section, the shares or debentures and any interest therein of a company shall be freely transferable. (3) The Company Law Board may on an application made by a depository, company, participant or investor or the Securities and Exchange Board of India "':'ithin two months from the date of transfer of any shares or debentures held by a depository or from the date on which the instrument of transfer or the intimation of transmission was delivered to the company as the case may be, after such inquiry as it thinks fit, direct any company or depository to rectify register or records if the transfer of the shares or debentures is in contravention of any of the provisions of th~ Securities and Exchange Board of India Act, 1992 or regulations made thereunder or the Sick Industrial Companies (Special Provisions) Act, 1985. (4) The Company Law Board while acting under sub-section (3), may at its discretion make such interim order as to suspend the voting rights before making or completing such enquiry. (5) The provisions of this section shall not restrict the right of a holder of shares or debentures, to transfer such shares or debentures and any person acquiring such shares or debentures shall be entitled to voting rights unless the voting rights have been suspended by an order of the Company Law Board. (6) Notwithstanding anything contained in this section, any ,further transfer, during the pendency of the application with the Company Law Board, of shares or debentures shall entitle the trqnsferee to voting rights unless the voting rights in respect of such transferee have also been suspended. (7) The provisions of sub-sections (5), (7), (9), (JO) and (12) of section 111 shall, so far as may be, apply to the proceedings before the Company· Law Board under this section as they apply to the proceedings under the section.". 10. In section 113, the following sub-section ;shall be inserted at the end:- "~ 4) Not~ithstanding anything contained in sub-section (J), whe;e the securities are dealt in a depository, the company shall intimate the details of allotment of securities to depository immediately on allotment of such securities.". SEc. ll TI-fE OA ?c- ====:::::.~c OF INDJA EXTRAORDINARY 11 11. In section 150 . ' h h ' m sub-section (J) • I (b) h eac s are by its nu b ,, , m c ausc , t e words "distinguishing 12 I . m er shall be omitted. • n section 152 • in b . each debenture by its su ·sec,~ion (J), in clause (b), the words ''distinguishing number shall be omitted 13. After section 152 . • " ' the following section shall be inserted, namely:- 152A. The regist . depository unde _er aod mdex of beneficial owners maintained by a deemed to be / s_ec~ion 11 of the Depositories Ordinance, 1995, shall be holders as th n m ex of members and register and index of debenture , e case may b ~ 14 I S h c, ior the purposes of this Act.". • n c edule II in Pa t II . sub-clause shall be .' r , m clause C, after sub-section 9, the followi~g mserted, namely:- "9A. The details f · • deposiroty. ". 0 option to subscribe for securities to be dealt in a . PART III AMENDMENTS TO THE S ECURITIES CONTRACTS (REGULATION) ACT, 1956 (42 OF 1956) . AMENDMENTS 1. In section 2 for cl (') . . I • ause 1 , the following clause shall be substituted, name y:- "(i) s t d r po e ivery contract means a contract which provides for,- (a) a~tual delivery of securities and the payment of a price therefor either on the same day as the date of the contract or on the ::t da~, the actual period taken for the despatch of the securities or f remittance of money therefor through the post being excluded rom the computation of the period aforesaid if the parties to the contract do not reside in the same town or locality; (b) tran~fer of the securities by the depository from the account of a beneficial owner to the account of another beneficial owner when such securitles are dealt with by a depository.". 2. Section 22A shall be omitted. PART IV AMENDMENT TO THE INCOME TAx Acr, 1961 (43 OF 1961) AMENDMEhlT In section 45, after sub-section (2), the following suwection shall be inserted, namely:- • "(2A) Where any person has had at any time during previous year any beneficial interest in any securities, then, any profits or gains arising from transfer made by the depository or participant of such beneficial interest -in respect of securities shall be chargeable to income-tax as the income of the beneficial owner of the previous year in which such transfer took place and shall not be regarded as income of the depository who is deemed to be the registered owner of securities by virtue of sub-section (1) of section 10 of the Depositories Ordinance, 1995) and for the purposes of - (i) section 48; and ( ii) proviso to clause ( 42A) of section 2, the cost of acquisition and the period of holding of any securities shall be deterwined on tbe basis of the first-iu-fir~ method. Exp/anation.-For the purposes of this sub-section, the expres­ sions "beneficial owner", ''depository" and "securityl) shall J1ave the 12 OF INDIA EXTRAORDINARY [PART 11-SEc. IJ THE GAZETTE meanings respectively assigned to them_ ii1 _clauses. (a), (e) a~~ Y> of sub­ section (J) of section 2 of the DcposJtones Ordrnancc, 199) •• PART V . AMENDMENT ro rnE BENAMI TRANSACTIONS_ (PROHIBITION) Acr, 1988 (45 OF 1988) AMENDMENT In section 3, for sub-section (2), the following sub-section shall ·be substituted, namely:- "(2) Nothing in sub-section (1) shall apply to- (a) the purchase of property by any person in the name of his wife or unmarried daughter and it shall be presumed, unless the contrary is proved, that the said property had been purchased for the benefit of the wife or the unmarried daughter", (b) the. securities held by a- (i) depository as registered owner tinder sub-section (1) of section 10 of the Depositories ordinance, 1995; (ii) participant as an agent of a depository. Explanation.~The expressions "depository" and "parti­ cipants" shall have the meanings respectively assigned ,to them in clauses (e) and (g) of sub-section (1) of section 2 of the Depositories ordinance, 1995.". PART VI AMENDMENTS TO THE SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992 (15 OF 1992). AMENDMENTS 1. In section 2, in sub-section (2), for the words, brackets and figures "the Securities Contracts (Regulation) Act, 1956", the. words, brackets and figures "the Securities Contracts (Regulation) Act, 1956 or the Depositories Ordinance, 1995" shall be substituted. 2. In section 11, in clause (ba), for for the words "depositories, custodians", the words "depositories, participants ◄ custodians" shall be substituted. 3. In section 12, in sub-section (lA}, for the words "depository, custodian", at both the places where they occur, the words "depository, participant, custodian" shall be substituted. 4. In section 16, in sub-section (1), for the words "this Act", the words "this Act or the Depositories Ordina11ce, 1995" shall be substituted. SHANKER DAY AL SHARMA, Pr~sident. K. L. MOHANPURIA. · Secy. to the Govt. qf India.