The Hindu Business Line : SEBI notifies on SEs' corporatisation

NOW that the BSE has completed its corporatisation and demutualisation exercise, the Securities and Exchange Board of India has passed the notification for the corporatisation and demutualisation of 10 regional stock exchanges.

The SEBI-approved final scheme provides guidelines to exchanges for the segregation of ownership and management from the trading rights of the members. These also include restriction on voting rights of shareholders who are also trading members and composition of the Governing Board.

As part of the corporatisation and demutualisation initiative, the stock exchanges that were set up as `Association of Persons' will have to incorporate a for-profit company, limited by shares, and demutualise. The exchanges that were set up as companies limited by guarantee will have to convert or re-register themselves to companies limited by shares and demutualise, while the stock exchanges that are already companies limited by shares will have to only demutualise, a SEBI press release said.

Accordingly, Madhya Pradesh SE, which is presently an association of persons, will be incorporated as a for-profit company limited by shares. Madras, Pune, Hyderabad, and Gauhati SEs, which are companies limited by guarantee will be converted into for-profit companies limited by shares. Also, Calcutta, Delhi, Uttar Pradesh, Bangalore and Cochin SEs, which are already companies limited by shares will continue as such and will have to only demutualise.

After corporatisation and demutualisation, there will be only one class of trading members with similar rights and privileges, and uniform standards will be followed in terms of capital adequacy, deposits, fees, etc. while admitting any person as a trading member or for accepting his surrender.

Also, Governing Boards of the exchanges will be so constituted that representatives of trading members do not exceed one-fourth of the total strength of the board, the SEBI release said.

Voting rights of the shareholders, who are also trading members, will be restricted to 5 per cent.

The exchanges have been asked to ensure that at least 51 per cent of their equity shares are held by public other than shareholders having trading rights.

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