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ASE to initiate steps towards demutualisation soon

BS Regional Bureau

The Ahmedabad Stock Exchange would be initiating concrete steps towards demutualising and corporatising itself within the next two-three days, said ASE president Deepak Shah in Ahmedabad on Sunday. The Securities and Exchange Board of India is reported to have asked elected broker-directors of the ASE to submit their resignations.

"We would first call an extra-ordinary general meeting within the next 2-3 days and the EGM date would be announced on MOnday.

ASE is currently run by a trust and our first step towards corporatisation would be to convert the trust into a company. In this regard, the Registrar of Companies has already approved the proposed name 'The Ahmedabad Stock Exchange Ltd' almost six months back," Shah said.

"The EGM would discuss and finalise the course of action to be adopted for formation of the company and we would go ahead accordingly", he revealed.

Talking about the Sebi directive, Shah said that none of the seven elected broker-members of ASE has received any official communication directly from the regulatory authority.

"The ASE executive director, who was in Bombay last week, called us on phone from there and informed us about it. Moreover former executive director of Sebi, M D Patel, who is now the public representative on the ASE board, also informed us verbally about Sebi's decision," he said.

Stating that ASE has already sought the advice of retired Supreme Court judge S B Majumdar on corporatisation, he said, "We are expecting the Union finance ministry to issue an ordinance announcing a one-time exemption of stamp duty for stock exchanges contemplating corporatisation and also exempting them from payment of corporate tax on their past income."

He said the elected members on the ASE governing board have sought a personal meeting with Sebi chairman D R Mehta to discuss the issue. "We are expecting to meet Mehta this week, most probably by Wednesday, so as to decide on our future course of action."

He did not expect harsh moves from the regulator. "There is neither any default, nor any kind of delay in pay-in or pay-out on ASE. Besides there is no investor complaint against ASE, so why should Sebi take any harsh action against us?"

Maintaining that the ideal solution in this regard is to allow ASE to merge with the National Stock Exchange, he said, "If all the ASE members are offered trading rights on the NSE, we are all willing to merge with it. NSE would, in turn, benefit by Rs 400 million net worth of the ASE."

Shah said that if the Union finance ministry is really keen on doing something good for the capital market, it should take a decision to merge all the stock exchanges throughout the country with the NSE, and the existing members of these exchanges should be given trading rights on the NSE.

Once that happens, it would ensure one effective network throughout India. Moreover it would also become possible for Sebi and the finance ministry to implement all their decisions with ease, he said.

"That would be the best decision in regard to corporatisation and demutualisation," he reiterated.

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