The depositories were established under the Depositories Act, 1996 which came into effect from 20.09.1995. Consequent to this enactment certain provisions of companies act, 1956 were amended. Depositories were established to record ownership details of every person holding equity shares in the share capital of the company in the book entry form.
A depository means a company formed and registered under the companies Act 1956 and which is registered under the Securities and Exchange Board of India Act, 1992 (SEBI) of Depositories Act 1996. By an agreement between the depository and the participant the participant avails services of the depository relating to the recording of allotment of securities or transfer of ownership of securities in the record of a depository. Such participant shall surrender the certificate of security to the issuer (a person making an issue of securities) The issuer on receipt of such certificate of security cancels such certificate and substitutes in its records the name of the depository as a registered owner in respect of that security. The depository shall enter the name of the person., who has surrendered the security for cancellation. In its records as the beneficial owner. Every depository shall on receipt of intimation from a participants’ register the transfer of security in the name of transferee. Every person subscribing to security offered by an issuer shall have the options either to receive the security certificates or hold securities with a depository . A depository shall be deemed to be the registered owner for the purposes of effecting transfers of ownership of securities on behalf of beneficial owner. The depository shall not have any voting rights or any other rights in respect of the securities held by it. 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. Depository shall maintain a register and index of beneficial owner.
Thus depository is nothing but an agent of the beneficial owner, a link between the issuer and the beneficial owner of facilitate record of allotments and transfer of securities.
Depository Related Law (Amendment) Ordinance 1997, amended the Depositories Act 1996, Depositories Act 1996 allowed only securities of companies to be dealt in the depository mode. With the amendments even the securities of statutory bodies like IDBI, UTI, SBI and other public sector and scheduled banks can be also now dealt within the depository mode. Consequential amendments were also effected in Companies Act 1956.
Register of Members:
Every company must keep a register of members with the following particulars:
1) The name, address and occupations if any of each members.
2) In case of a company having a share capital the shares held by each member, distinguishing each share by its number except where such shares are held with a depository and the amount paid or agreed to be considered as aid on those shares.
3) The date at which each member was entered in the register as a member.
4) The date on which any person ceased to be a member;
In Gulabrai Kalidas Naik Versus Lakshnidas Patel ( 1977) it was held that till the name is entered it could not be said that a person can enjoy the powers of a member conferred by the companies act on the members of a company.
Where the company has converted any of its share into stock and given notice of the conversion to the Registrar the register shall show the amount of stock held by each of the member. Any alterations in the register of members must be noted within 14 days of the alteration.
The register of members shall be prima facie evidence of any matter directed or authorized to be inserted therein by the Companies Act. If any defaults committed in maintaining the register, the company and every officer of the company who is in default shall be punishable with fine which may extend to Rs 500 for every day during which the default continues.
Source: Business Law