[Section 35(1) substituted by section 290, item 22(a) of Schedule 4, of the Financial Sector Regulation Act, 2017 (Act No. 9 of 2017), Notice No. 853, GG 41060, dated 22 August 2017 - effective 9 February 2018 (Notice R. 99, GG 41433, dated 9 February 2018)]
| (2) |
The depository rules— |
| (b) |
must provide for equitable criteria for authorisation and exclusion of participants and, in particular, that no person may be admitted as a participant or allowed to continue such person’s business as a participant unless the person— |
| (i) |
is of good character and high business integrity or, in the case of a corporate body, is managed by persons who are of good character and high business integrity; and |
| (ii) |
complies or, in the case of a corporate body, is managed by persons or employs persons who comply with the standards of training, experience and other qualifications required by the depository rules; |
| (c) |
must provide for an orderly process by which a participant ceases to be a participant; |
| (e) |
must provide for the steps to be taken by the central securities depository, or a person to whom the central securities depository has delegated its investigative and disciplinary functions, to investigate, and discipline a participant or officer or employee of a participant who contravenes or fails to comply with the depository rules, the interim depository rules or the depository directives and must require a report on the disciplinary proceedings to be furnished to the Authority within 30 days after the completion of such proceedings; |
| (f) |
must provide for the manner in which a participant who is believed to— |
| (i) |
be able to furnish any information on the subject of any investigation; or |
| (ii) |
have in that participant’s possession or under that participant’s control any document, which has bearing upon that subject, may be required to appear before a person conducting an investigation, to be interrogated or to produce such document; |
| (g) |
must provide for requirements in respect of a participant’s financial soundness and valid financial cover that the participant must hold in respect of— |
| (i) |
the participant’s actual and potential liabilities; |
| (ii) |
conditional and contingent liabilities to the central securities depository; and |
| (iii) |
liabilities which existed before or accrue after a person has ceased to be a participant; |
| (h) |
must provide for requirements in respect of corporate actions, including, but not limited to, that— |
| (i) |
dividends paid and other payments made by issuers in respect of securities are paid by issuers to the central securities depository, participants or clients and, if applicable, by the central securities depository to participants, and by participants to clients; |
| (ii) |
notices regarding rights and other benefits accruing to the owners of securities deposited with the central securities depository are conveyed to the central securities depository, participants or clients; and if applicable, that effect is given to the lawful instructions of clients with regard to voting rights and other matters, and |
| (iii) |
the rights of participants or clients are not in any way diminished by the fact that securities held by them or on their behalf are held collectively in a central securities account or securities account as the case may be; |
| (i) |
must require that a participant, on written request from a client to withdraw securities or an interest in securities held in a securities account or central securities account, deliver a certificate or written instrument evidencing the same number of securities, or securities of the same nominal value and of the same kind, as the securities held on behalf of that client in the securities account or central securities account, as long as the client has a sufficient unencumbered credit balance of those securities with the participant concerned; |
| (j) |
must provide for requirements in respect of same day debit balances and prohibit debit balances at the end of a day in a securities account or a central securities account; |
| (k) |
may provide that a central securities depository may refuse to accept securities issued by any particular issuer with due regard to the clearing and settlement arrangements of an exchange for transactions in those securities; |
| (i) |
the duty of persons for whom securities accounts or central securities accounts are kept to disclose to a participant or central securities depository, as the case may be, and the duty of a participant to disclose to a central securities depository, information about a beneficial, limited or other interest in securities deposited with the participant or central securities depository, as the case may be; and |
| (ii) |
the manner, form and frequency of such disclosure; |
| (m) |
must provide for the manner in which a central securities depository or a participant must keep records of clients, or owners or beneficial owners of securities and limited or other interests in securities; |
| (n) |
must provide for the manner in which participants must give instructions to a central securities depository; |
| (o) |
if the central securities depository is appointed as a clearing house by an exchange, may regulate, in a manner consistent with the exchange rules, the clearing and settlement functions to be performed by participants in the clearing and settlement process; |
| (p) |
must provide for the purposes for which, and the process by which, a central securities depository may issue depository directives; |
| (q) |
must provide for the manner in which a participant must hold and administer securities; |
| (r) |
must provide for the approval by the central securities depository of a nominee of a participant; |
| (s) |
must provide that no participant may open a securities account or a central securities account for a person whom the participant believes or suspects requires approval as a nominee under section 76 without having taken reasonable measures to ascertain that such person has the necessary approval; |
| (u) |
must provide for the manner in which complaints against a participant or officer or employee of a participant must be addressed ; |
| (v) |
must provide for a process whereby complaints by participants against the central securities depository in respect of the exercise of functions by the central securities depository may be made, considered and responded to; |
| (w) |
must provide for the authority of, and the manner in and circumstances under which— |
| (i) |
a central securities depository may limit the revocation of any settlement instruction given by a participant or its client; |
| (ii) |
a participant or client may revoke any settlement instruction before the point in time when settlement instructions become irrevocable as determined in the depository rules, but prior to settlement; or |
| (iii) |
a central depository or a participant may terminate transactions on the commencement of insolvency proceedings; |
| (i) |
arrangements in relation to the administration of securities held for own account or on behalf of a client by a participant, including the settlement of unsettled transactions; |
| (ii) |
arrangements in relation to the administration of dividends and other payments made by issuers for the benefit of participants or clients; and |
| (iii) |
the manner in which a shortfall in securities in the securities account or central securities account must be apportioned amongst the persons whose securities are held in such account; |
under insolvency proceedings in respect of that participant;
| (y) |
must provide for netting arrangements if transactions in one or more categories of securities settled through the central securities depository settle on a net basis; |
| (z) |
must provide for the manner in which a participant is required to conduct the securities services for which it is authorised; |
| (aa) |
must provide for the manner in which the central securities depository monitors compliance by its participants with this Act, the depository rules and the depository directives. |
| (2A) |
Regulations or standards may prescribe additional matters to those listed in subsection (2) that must be contained in the depository rules. |
[Section 35(2A) inserted by section 290, item 22(b) of Schedule 4, of the Financial Sector Regulation Act, 2017 (Act No. 9 of 2017), Notice No. 853, GG 41060, dated 22 August 2017 - effective 9 February 2018 (Notice R. 99, GG 41433, dated 9 February 2018)]
| (a) |
Any rules made in terms of subsection (2)(w) must have due regard for, and not be in conflict with, any applicable exchange rules. |
| (b) |
Any rules made in terms of subsection (2)(w), (x) and (y) must have due regard for, and not be in conflict with, section 8 of the National Payment System Act. |
[Section 35(4)(a) substituted by section 290, item 22(c) of Schedule 4, of the Financial Sector Regulation Act, 2017 (Act No. 9 of 2017), Notice No. 853, GG 41060, dated 22 August 2017 - effective 9 February 2018 (Notice R. 99, GG 41433, dated 9 February 2018)]
| (b) |
If the depository rules provide for this, the rules must, provide for— |
| (i) |
the identification of those securities services that will be authorised and regulated by the central securities depository in terms of the depository rules and those that will be authorised and regulated by the supervisory authority of the country under whose laws the external participant is authorised and supervised; |
| (ii) |
where a central securities depository has approved an external central securities depository as a participant, for the identification of the relevant laws or depository rules that apply to each aspect of the participation, including, but not limited to, the laws regulating effectiveness against third parties and insolvency proceedings. |
[Section 35(4)(b)(ii) substituted by section 290, item 22(d) of Schedule 4, of the Financial Sector Regulation Act, 2017 (Act No. 9 of 2017), Notice No. 853, GG 41060, dated 22 August 2017 - effective 9 February 2018 (Notice R. 99, GG 41433, dated 9 February 2018)]
| (5) |
A central securities depository may, with the approval of the Authority, make depository rules, that are not inconsistent with this Act, on additional matters. |
| (6) |
A depository rule made under this section is binding on— |
| (i) |
the central securities depository; |
| (ii) |
participants of the central securities depository; |
| (iii) |
issuers of securities deposited with that central securities depository; |
| (iv) |
any other person that has a central securities account with the central securities depository; |
| (v) |
the officers and employees of the central securities depository, its participants, issuers, and of other persons that have a central securities account with the central securities depository; and |
| (vi) |
clients of participants. |
Statistics Act, 1999
