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      Question

      Under what conditions can a beneficial owner create a

      pledge or hypothecation on securities owned through a depository as per the Depositories Act?
      A The beneficial owner can create a pledge or hypothecation without any approval Correct Answer Incorrect Answer
      B The beneficial owner must obtain approval from the Securities and Exchange Board of India (SEBI) to create a pledge or hypothecation Correct Answer Incorrect Answer
      C The beneficial owner can create a pledge or hypothecation only with the approval of the issuer of the security Correct Answer Incorrect Answer
      D The beneficial owner can create a pledge or hypothecation only with the prior approval of the depository Correct Answer Incorrect Answer
      E The beneficial owner is not allowed to create a pledge or hypothecation on securities owned through a depository Correct Answer Incorrect Answer

      Solution

      Section 12. Pledge or hypothecation of securities held in a depository—(1) Subject to such regulations and bye-laws, as may be made in this behalf, a beneficial owner may with the previous approval of the depository create a pledge or hypothecation in respect of a security owned by him through a depository.

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