The Securities and Exchange Board of India, with some modifications, approved the scheme for the corporatisation and demutualisation of the Bombay Stock Exchange on Friday.
In a statement, Sebi said that 'after following the due process and on being satisfied that it is in the interest of the trade and also in the public interest, approved the scheme, with certain modifications vide Order dated May 20, 2005.'
The salient features of the BSE corporatisation scheme are as follows:
- A for-profit company limited by shares under Section 12 of the Companies Act, 1956, in the name and style of Bombay Stock Exchange Limited (BSE Ltd) shall be incorporated to succeed BSE.
- The ownership and management of BSE Ltd shall be segregated from the trading rights of the members.
- Initially the membership cardholders of BSE shall become shareholders of BSE Ltd and they may also become the trading members of BSE Ltd.
- A limited trading member (deposit-based member) of BSE also shall become a trading member of BSE Ltd.
- After Corporatisation and Demutualisation, there will be only one class of trading members with similar rights and privileges and uniform standards shall be followed in terms of capital adequacy, deposits, fees, etc. while admitting any person as a trading member or accepting his surrender.
- The governing board of BSE Ltd shall be so constituted that the representatives of the trading members do not exceed one-fourth of the total strength of the governing board.
- BSE Ltd shall ensure that the existing assets and reserves transferred from BSE are utilised only for the operations of the corporatised and demutualised exchange.
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BSE Ltd shall ensure that at least 51 per cent of its equity shares are continuously held by public other than shareholders having trading rights.
The order and the scheme have been submitted for publication in the Official Gazette.
The full text of the order and the scheme is available on the Sebi Web site.
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