The Hindu Business Line : CSE fixes due date as Nov 28 for demutualisation

Mr T.K. Das, the Securities and Exchange Board of India (SEBI) appointed Administrator, has informed members that November 28 will be the due date in accordance with the relevant clause of the Calcutta Stock Exchange Association Ltd. (Demutualisation) Scheme, 2005.

The specific provision being referred to is Clause 2.1 of the scheme. Its implementation — the scheme was approved by the securities regulator in August — will depend on the time schedule that will now be followed.

According to the scheme, the due date shall not be later than three months from the date of publication of the SEBI order in line with the Securities Contract Regulation Act (SCRA).

The due date will have wide implications, especially for those who will subsequently hold CSE shares. A member (that is, one registered as a stockbroker on the day preceding the due date) will become a trading member on that date. Also, a member who is not registered as a stockbroker on the day preceding the due date will become a trading member on being registered as a stockbroker under SEBI (Stock Brokers and Sub-Brokers) Regulations, 1992, within three months.

The exchange is to incorporate the provisions of the scheme appropriately in its memorandum and articles of association as well as other regulations on or before the due date. On and from the due date or on expiry of the supersession period, whichever is later, the governing board will be constituted in accordance with the provisions of the CSE's articles of association, provided that the representation of trading members does not exceed one-fourth of the total strength of the governing board.

Clearing functions transfer within 2 yrs

THE concept of due date is especially critical with regard to the transfer of clearing and settlement functions as outlined in the scheme. The CSE must, within two years of the due date, transfer the duties of the clearing house to a Clearing Corporation, recognised under SCRA.

Until the functions of the clearing house are transferred, the clearing and settlement functions will be carried out by the mechanism currently used by the CSE.

The scheme has specified that the CSE must 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 trading member will have voting rights (taken together with voting rights held by him and by persons acting in concert with him) exceeding 5 per cent of the voting rights.

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