The D R Dhanuka panel has recommended compulsory dematerialisation for new issue of securities exceeding Rs 10 crore. According to a Securities and Exchange Board of India (Sebi) release, the committee has recommended that the issuer should not withdraw from its agreement with the depository after demat of securities.
The committee, besides Justice Dhanuka, comprised Rafique Dada, Cyril Shroff, Kunda Shere and D N Raval.
The panel has suggested the following amendments to the Depository's Act.
* Issuer not to withdraw from agreement with depository after dematerlisation of its securities. Option to issuer to enter into agreement with any one of the depository in case of several depositories.
* Nomination facility to the beneficial owner in respect of dematerialised security.
* In case of pledge of dematerialised securities, the provisions of Contract Act not to be applicable.
* Bankers Book Evidence Act, 1879, applicable also to the statement issued by "participant".
* Depository to indemnify the beneficial owner only for its own negligence and fraud and not generally.
* Contravention of direction of the board is made punishable.
lAppeal to be with Securities Appellate Tribunal from the order of the Board.
* Jurisdiction of Consumer Forum barred in relation to dispute relating to dematerialised securities.
* Depository Act to override memorandum and articles of association of companies.
* Exemption from stamp duty in respect of issue and transfer of dematerialised security.
* Participants to hold securities of beneficial owner as trustee pending dematerialisation of the shares.
