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The Securities and Exchange Board of India (Sebi) has allowed the Coimbatore Stock Exchange (CSX) to exit as a stock exchange. It has asked CSX not to use the term 'stock exchange' or any variant of it in its name.
The decision comes about seven years after CSX first submitted an exit application. Sebi said all known liabilities had been brought and as on date, there was no unknown liability, according to CSX's valuation report and undertaking on March 21.
"I note CSX has substantially complied with the conditions contained in the 2012 exit circular, subject to its undertakings. I, therefore, am of the view that it is a fit case to allow exit to CSX in terms of clause 8 of the 2012 exit circular," said the exit order issued by Sebi whole-time director Rajeev Kumar Agarwal.
The market regulator directed CSX to comply with its tax obligations under the Income Tax Act, 1961, as well as its undertakings to Sebi.
Before the exit, the value of assets and liabilities, including contingent liabilities, was arrived at by adopting the net-asset-approach-of-valuation approach. "The fair value of CSX's net asset has been found to be Rs 47.25 crore," the Sebi order said.
CSX was incorporated on July 9, 1991 under the Companies Act, 1956, and the Centre had recognised it as a stock exchange under the provisions of the Securities Contracts (Regulation) Act, 1956, initially for a period of three years. This was renewed from time to time, under Rule 7 of the Securities Contracts (Regulation) Rules, 1957.
The recognition was last renewed by Sebi on September 18, 2005. However, this was subject to the condition it would comply with the observations and suggestions in CSX's report of inspection by Sebi during July 19-21, 2004.
CSX did not apply for a renewal of its recognition as a stock exchange after the renewal granted to it in 2005 expired in 2006.
Meanwhile, Sebi laid down the framework for exit by stock exchanges whose recognition was withdrawn or renewal of recognition refused by it. Based on this, on January 1, 2009, CSX filed a request with Sebi to exit as stock exchange. However, since the resolution pertaining to CSX's exit passed by Sebi members on December 31 2008 didn't adhere to the provisions of the Companies Act, in March 2009, Sebi advised CSX to make another request after passing a fresh resolution.
