Demutualisation prod for BSE

Their corporatisation will involve a notional transfer of assets.

The waiver of stamp duty fees for stock exchanges in the Union Budget will pave the way for the demutualisation and corporatisation of Asia's oldest bourse, the Bombay Stock Exchange (BSE).

In his Budget speech, finance minister P Chidambaram said that it had been decided to segregate ownership from management and governance of stock exchanges by converting the stock exchanges into corporatised and demutualised entities.

During this process of conversion, there will be a notional transfer of the assets of the existing stock exchanges when these are converted into demutualised stock exchanges.

In order to ensure that this process of transformation through the scheme of corporatisation and demutualisation and related instruments relating to the scheme are not liable to stamp duty, the Indian Stamp Act is being amended so as to keep the whole process tax-neutral.

According to sources, the stamp duty payment on transfer of ownership to the new entity BSE Ltd on corporatisation of the stock exchange was estimated to be around Rs 35 to Rs 40 crore.

The other two exchanges that will benefit from the proposal are Ahmedabad and Indore stock exchanges, who have already submitted their corporatisation proposals.

"The issue of stamp duty was one of the demands pending with the finance minister. The waiver of stamp duty will speed the process of demutualisation of the stock exchange," said a senior exchange official.

The Securities and Exchange Board of India (Sebi) had set March 31, 2005 as the deadline to complete the entire process of corporatisation and demutualisation of the stock exchanges.

Meanwhile, the members of the Bombay Stock Exchange (BSE) are expected to clear the revised BSE (corporatisation and demutulalisation) scheme in an extra ordinary general body meeting scheduled for March 3, 2005. Once Sebi gives its approval, the new entity, BSE Ltd., will be listed on the stock exchange soon.