Central Depositories Act, 1997

The Central Depositories Act, 1997 created the legal framework for "book-entry" (electronic, dematerialised) securities in Pakistan, allowing shares, debentures, and other securities to be held and transferred electronically through a central depository rather than as paper certificates. Section 3 gives this Act overriding effect over the Companies Ordinance, 1984 and other conflicting laws or company documents.

Section 2 defines the system's key building blocks: a "central depository" (a company registered with the securities regulator under the Securities and Exchange Ordinance, 1969), a "book-entry security" (a security recorded electronically in the depository's register instead of by physical certificate), an "account-holder," a "participant" (typically a stock exchange member who operates accounts on behalf of others), and a "sub-account holder." Section 4 establishes the central depository system itself. Section 5 prevents a central depository from being treated as a member of the companies whose securities it holds. Sections 6-7 govern how transfers happen under the book-entry system and their legal effect on the transferee, while Section 8 discharges the depository from liability when it acts on proper instructions.

Section 9 requires the depository to supply information as needed, Section 10 addresses bonus share issues, and Section 11 bars rectification of the central depository register (protecting the finality of electronic entries). Section 12 allows book-entry securities to be pledged, and Sections 13-16 cover consolidation or subdivision of securities, regulations for new security issues, converting non-equity into equity securities, and issuing "jumbo certificates" (consolidated certificates registered in the depository's own name). Section 17 allows inspection of the central depository register, and Section 18 makes register entries prima facie evidence in legal proceedings. Section 19 permits borrowing and lending of securities through the system.

Sections 20-22 impose a duty of secrecy on the depository (Section 20), specify permitted disclosures (Section 21), and regulate access to the computer system (Section 22). Section 23 requires the depository to assist the Registrar of Companies, the securities regulator ("the Authority"), the State Bank of Pakistan, and stock exchanges. Sections 24-26 address unauthorised handling of book-entry securities, nomination and transmission of securities (e.g., on death), and settlement of securities transactions through the depository system. Sections 27-33 set out enforcement: the power to call for information or appoint inspectors, offences (Section 28, without specific amounts stated in this extract), rules on cognizance and non-cognizable status of offences, punishment and fine adjudication, and rights of review and appeal. Section 34 and the accompanying Schedule amend several provisions of the Companies Ordinance, 1984 to accommodate central depository shareholding, and Sections 35-36 give the depository power to make regulations and the Authority power to resolve implementation difficulties.

The extract does not show significant amendment footnotes to this Act itself, so it appears to remain largely as originally enacted in 1997, though the securities-regulatory landscape it references (the Corporate Law Authority, the 1969 Ordinance) may have since evolved under later legislation.