The Hindu Business Line : CSE submits new demutualisation model akin to BSE proposal

THE Calcutta Stock Exchange (CSE) may well follow the BSE model of corporatisation and demutualisation, if signals sent by the securities regulator are any indication.

Almost a year after an EGM approved a demutualisation plan drafted by the CSE, the exchange has come up with a fresh version based on directions given by SEBI on the subject. The regulator has clearly indicated that the new scheme will have to be in line with the BSE (Corporatisation & Demutualisation) Scheme.

CSE informed members on Wednesday that (following discussions with SEBI officials on July 1) the scheme has been reworked and put across for a fresh review. The demutualisation scheme, it may be recalled, was cleared at an EGM in July last year. The bourse was advised to "revise and resubmit" it later.

The exchange, it may be pointed out, is currently a company limited by shares, registered under the Companies Act, 1913. It is recognised as a stock exchange by the Government under Securities Contract Regulations Act on a permanent basis.

According to the proposed `The Calcutta Stock Exchange Association Ltd (Demutualisation) Scheme, 2005', the CSE governing board will be constituted in accordance with the provisions of the Articles of Association of CSE, provided that:

1) The representation of trading members does not exceed one-fourth of the total strength of the governing board, and the remaining directors are appointed in the manner specified by SEBI, and 2) the chief executive, by whatever name called, is an ex-officio director. Also, SEBI may nominate directors on the board.

The scheme includes the following:

CSE shares may at any time be listed on any recognised stock exchange. After the `due date', a person desirous of becoming a Trading Member (TM) shall be admitted if he complies with the requirements and brings in the required fees and deposits.

CSE shall, for the purpose of admitting any person as a TM, follow uniform standards in terms of capital adequacy and deposits/fees irrespective of mode of acquisition of trading right by that person, provided that different standards may be followed for admission of a person as a TM who has acquired trading right by way of transmission.

A TM may or may not be a shareholder, and a shareholder may or may not be a TM. As for voting rights, CSE shall ensure that at least 51 per cent of its equity shares is held by public other than shareholders having trading rights. On and from the due date, no shareholder who is a TM, shall have voting rights (taken together with voting rights held by him and by persons acting in concert with him) exceeding five per cent of the voting rights.

CSE shall, within one year of the due date, subject to the prior approval of SEBI, transfer the duties and functions of its clearing house to a clearing corporation.

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