CORPORATIZATION OF RECOGNISED STOCK EXCHAGE

                                          

                             CORPORATISATION OF STOCK EXCHANGE

Procedure for corporatization and demutualization of stock exchange [sec 4B] of security contract (regulation) act 1956.

Corporatization is a process of transforming in to corporate entity. A recognized stock exchange is required to be fulfilled following procedure to become corporate entity:

1.       After recognition of stock exchange a scheme is prepared for corporatization by the recognized stock exchange.

2.       Such scheme is to be submitted to SEBI within the prescribed time as specified in sec 4B.

3.       No shares shall be issued for lawful consideration or provision of trading rights instead of membership card.

4.       Dividend shall not be declared out of reserves or assets of stock exchange.

If all the conditions are satisfied by the stock exchange, SEBI after making required enquiry approves the scheme.

The scheme so approved shall be published immediately by-

SEBI -> In the official Gazette.

Stock exchange-> Two daily news paper circulated in India as may be specified by SEBI.

When SEBI approves the scheme, by an order restrict

1.       The voting right of shareholders who are also stock broker.

2.       Right to appoint representation on the governing body of stock exchange.

3.       Maximum number of representation shall not be exceeding ¼ of total strength of the governing body.

After getting approval from the SEBI at least 51% shares of the stock exchange shall be issued to public other than shareholder having trading rights. This condition is to be fulfilled by the stock exchange within 12 months from the date of publication of order.