Corporatisation, demutualisation scheme for HSE

The Securities and Exchange Board of India (Sebi) notified the Corporatisation and Demutualisation Schemes for ten stock exchanges including the Hyderabad Stock Exchange (HSE).

As per the notification issued on Monday, HSE shall re-register itself in the name and style of "The Hyderabad Stock Exchange Limited" within three months from the date of notification in accordance with Section 32 of the Companies Act, 1956.

The members, as may be identified by HSEL, shall each subscribe to and pay for 10,000 fully paid-up equity shares of the face value of Re 1 each for cash at par for the purpose of its re-registration.

The first Governing Board of HSEL on re-registration shall comprise directors as are named as first directors in the articles of association (AOA) of HSEL, subject to the condition that the representatives of the members do not exceed one-fourth of the total strength of the Governing Board.

The Governing Board shall be constituted in accordance with the provisions of the AOA of HSEL in force from time to time, provided the representation of trading members does not exceed one-fourth of the total strength of the board and the remaining directors are appointed in the manner as may be specified by Sebi from time to time, and the chief executive, by whatever name called, is an ex-officio director. Sebi may nominate directors on the Governing Board as and when it deems fit.

Every Member or his nominee, other than the members who have subscribed to equity shares, shall be entitled to 10,000 fully paid-up equity shares of the face value of Re 1 each for cash at par.

The allotment of shares to a member suspended by HSEL shall be kept in abeyance till the suspension continues. The allotment of shares in respect of deceased and defaulter members shall be made on fulfilment of all requisite formalities.HSEL may at any time list its securities on any recognised stock exchange.

A member, who is registered as a stock broker on the day preceding the due date (November 29, 2005), shall become a trading member on the due date.

After the due date, a person desirous of becoming a trading member shall be admitted if he complies with requirements. HSEL shall, for the purpose of admitting any person as a trading member, follow uniform standards in terms of capital adequacy, deposits, fees, etc 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 trading member who has acquired trading right by way of transmission.

Irrespective of the date or mode of acquisition of trading right, the trading members shall have uniform rights and privileges.

HSEL shall ensure that at least 51 per cent of its equity shares are held by public other than shareholders having trading rights. HSEL shall, within two years from the due date, subject to the prior approval of Sebi, transfer the duties and functions of its clearing house to a Clearing Corporation.

If any difficulty arises in giving effect to the provisions of this scheme, Sebi may, at the written request of HSEL, relax any of the provisions of this scheme.