Order under Section 4B (6) read with Section 4B (7) of the Securities Contracts (Regulation) Act, 1956 in the matter of the Cochin Stock Exchange Limited (Demutualisation) Scheme, 2005. - S.O. No.1207(E) - SEBI/MRD/48110/2005 - SEBI

SECURITIES AND EXCHANGE BOARD OF INDIA NOTIFICATION Mumbai, the 29th August, 2005 S. O. 1207 (E). 1.0 The Cochin Stock Exchange Limited (hereinafter referred to as the CoSE ), registered under the Companies Act, 1956 as a company limited by shares, is a recognised stock exchange having its Registered Office at MES Dr. P. K. Abdul Gafoor Memorial Cultural Complex, 36/1565, 4th Floor, Judges Avenue, Kaloor, Cochin 682017. The CoSE is required to be demutualised in accordance with the provisions of the Securities Contracts (Regulation) Act, 1956 (hereinafter referred to as the SCRA ). 2.0 The CoSE, vide its letter dated January 31, 2005, submitted a scheme for its demutualisation for approval to the Securities and Exchange Board of India (hereinafter referred to as the SEBI ) in terms of sub-section (1) of section 4B of the SCRA. SEBI vide its letter dated May 25, 2005 advised CoSE to submit a revised scheme taking into account the provisions of the BSE (Corporatisation and Demutualisation) Scheme, 2005 which may be relevant and applicable to CoSE. 3.0 Thereafter, CoSE, vide its letter dated June 11, 2005, submitted a revised Scheme for demutualisation in consonance with the BSE (Corporatisation and Demutualisation) Scheme, 2005. SEBI made enquiries and obtained information from CoSE through a meeting on June 27, 2005. Based on the discussions during the said meeting, CoSE desired to submit a further revised scheme. 4.0 Accordingly, CoSE, vide its letter dated July 1, 2005, submitted a further revised Scheme for demutualisation (hereinafter referred to as the Scheme ) for approval to SEBI in accordance with the provisions of the SCRA. 5.0 The Scheme, inter alia, provides for the segregation of ownership and management from the trading rights of the members, restriction on voting rights of shareholders who are also trading members, composition of the Governing Board etc. in accordance with the provisions of Section 4B(6) of the SCRA, utilisation of assets and reserves and other matters required for the purpose of and in connection with the demutualisation of CoSE. 6.0 SEBI, having considered the Scheme and on being satisfied that it would be in the interest of the trade and also in the public interest, hereby approves the Scheme with minor modifications. The approved Scheme is enclosed as Annexure - A. 7.0 CoSE shall ensure compliance with the Scheme within the time as specified in the Scheme and shall not do anything contrary to the provisions of Scheme and submit compliance report to SEBI in the manner as may be specified by SEBI. 8.0 SEBI reserves right to amend, alter or modify the Scheme in the interest of the trade and the public interest and in furtherance of the objectives of the demutualisation of the stock exchange. 9.0 The Scheme shall come into effect on the day of its publication in the Official Gazette. [F. No. SEBI/MRD/48110/2005] M. DAMODARAN, Chairman Encl: Annexure A Annexure - A THE COCHIN STOCK EXCHANGE LIMITED (DEMUTUALISATION) SCHEME, 2005 1. Title and Commencement 1.1 This Scheme shall be called the Cochin Stock Exchange Limited (Demutualisation) Scheme, 2005 (hereinafter referred to as this Scheme ). 1.2 This Scheme shall have effect on its publication under sub-section (4) of section 4B of the Securities Contracts (Regulation) Act, 1956 (hereinafter referred to as SCRA ). 1.3 Cochin Stock Exchange Limited (hereinafter referred to as CoSE ) shall be demutualised in accordance with this Scheme on and from the Appointed Date, as may be notified by the Securities and Exchange Board of India (hereinafter referred to as SEBI), in respect of CoSE under Section 4A of the SCRA: Provided that the activities specified in the respective clauses of this Scheme shall be implemented as per the time schedule specified in those clauses. 2. Definitions In this Scheme, unless the context otherwise requires: 2.1 Cochin Stock Exchange Limited means the Company limited by shares, registered under the Companies Act, 1956 having its Registered Office at MES Dr. P. K. Abdul Gafoor Memorial Cultural Complex, 36/1565, 4th Floor, Judges Avenue, Kaloor, Cochin 682017 and recognized as a stock exchange by the Central Government under the SCRA. 2.2 Due Date means the date, as may be determined by the Governing Board which shall not be later than 3 months from the date of publication of the Order under sub-section (7) of section 4B of the SCRA. 2.3 Governing Board means the Board of Directors of CoSE. 2.4 Member means a person who is a member of CoSE on the day preceding the Due Date as per the register of members maintained by it. 2.5 Shareholder means a person who holds any equity share(s) of CoSE on or after the Due Date. 2.6 Trading Member means a stock broker of CoSE and registered with SEBI as such under the SEBI (Stock Brokers and Sub-Brokers) Regulations, 1992. 2.7 Words and expressions used and not defined in this Scheme but defined in the Securities and Exchange Board of India Act, 1992, the Depositories Act, 1996, the SCRA, the Companies Act, 1956, the rules and regulations made under these Acts and the Memorandum and Articles of Association, Rules, Bye-laws and Regulations of CoSE shall have the same meanings respectively assigned to them in the above mentioned Acts, Memorandum and Articles of Association, Rules, Bye-laws and Regulations. 3. Governing Board 3.1 The Governing Board, on and from Due Date, shall be constituted in accordance with the provisions of the Articles of Association of CoSE in force from time to time: Provided that (i) the representation of Trading Members does not exceed one-fourth of the total strength of the Governing Board, and the remaining directors are appointed in the manner as may be specified by SEBI from time to time, and (ii) the Chief Executive, by whatever name called, is an ex-officio director. 3.2 Notwithstanding anything contained in clause 3.1 SEBI may nominate directors on the Governing Board as and when deemed fit. 4. Listing of Shares CoSE may at any time list its securities on any recognised stock exchange. 5. Demutualisation 5.1 A Trading Member may or may not be a Shareholder. 5.2 A Shareholder may or may not be a Trading Member. 6. Trading Rights 6.1 A Member, who is registered as a Stock Broker on the day preceeding the Due Date, shall become a Trading Member on the Due Date. 6.2 A Member, who is not registered as a stock broker on the day preceding the Due Date, shall become a Trading Member on being registered as a stock broker under the SEBI (Stock Brokers and Sub-Brokers) Regulations, 1992: Provided that his application for registration is submitted to SEBI within one month from the Due Date. 6.3 After the Due Date, a person desirous of becoming a Trading Member shall be admitted if he complies with requirements and brings in specified fees and deposits as specified in the Rules, Bye-laws and Regulations of CoSE. 6.4 CoSE 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 . 6.5 Irrespective of the date or mode of acquisition of trading right, the Trading Members shall have uniform rights and privileges: Provided that CoSE may, with the prior approval of SEBI, grant additional privileges to those Trading Members who were Members on the day preceding the Due Date. 6.6 Trading Members on the Due Date shall continue to have the same rights and privileges in respect of their clients and constituents and other members arising out of or under any act, omission or contract or law, notification, order, direction, etc. as had accrued to them while being Members on or before the Due Date. 6.7 Trading Members shall be bound by all obligations and liabilities towards their clients and constituents, SEBI, CoSE and other authorities or other persons arising out of or under any act, omission or contract or law, notification, order, direction, etc. while being Members on or before the Due Date. 6.8 A Trading Member may surrender his membership to CoSE in the manner specified in the Rules, Bye-laws and Regulations of CoSE. 7. Shareholding Rights 7.1 A Member shall become a shareholder on the Due Date. 7.2 CoSE shall ensure that atleast 51% of its equity shares are held by public other than shareholders having trading rights in the manner and within the period prescribed in subsection (8) of Section 4B of the SCRA. 7.3 On and from the Appointed Date, CoSE shall ensure that public other than shareholders having trading rights continuously hold at least 51% of equity shares. 7.4 On and from the Due Date, no shareholder, who is a Trading Member, shall have voting rights (taken together with voting rights held by him and by any persons acting in concert with him) exceeding 5% of the voting rights in CoSE. 8. Memorandum and Articles of Association, etc. 8.1 CoSE shall incorporate the provisions of this Scheme appropriately in its Memorandum and Articles of Association and the Rules, Bye-laws and Regulations on or before the Due Date. 8.2 The Memorandum and Articles of Association and the Rules, Bye-laws and Regulations of CoSE may be amended after the Due Date in accordance with the applicable laws, provided that no such amendment is inconsistent with any provision of this Scheme. 9. Transfer of Clearing and Settlement Functions 9.1 CoSE shall, within two years of the Due Date, subject to the prior approval of SEBI, transfer the duties and functions of its clearing house to a Clearing Corporation, recognised under the SCRA. 9.2 Until the duties and functions of the clearing house are transferred as provided in clause 9.1, the clearing and settlement functions in relation to trading on CoSE shall be carried out by the clearing and settlement mechanism as used by CoSE at present or in such other manner as the Governing Board may determine. 10. Utilisation of Assets and Reserves 10.1 CoSE shall not do anything contrary to the provisions of section 4B (3) of the SCRA. 10.2 Without prejudice to the generality of the provisions of clause 10.1, CoSE shall not use its assets and reserves as on the date of publication of this Scheme or the proceeds from disposal of such assets or the proceeds from disposal of successive species of assets acquired from the proceeds of disposal of such assets for any purpose other than discharging the current liabilities outstanding as on the date of publication of this Scheme or for the business operations of stock exchange. 11. Compliance with this Scheme 11.1 CoSE shall ensure compliance with the provisions of this Scheme at all times and shall not do anything contrary to the provisions of this Scheme. 11.2 Without prejudice to the generality of the provisions in clause 11.1, CoSE shall continuously comply with the provisions in clauses 3.1, 5, 6.3, 6.4, 6.5, 6.8, 7.3, 7.4, 8.2 and 10. 11.3 CoSE shall report compliance with the provisions of this Scheme in such manner as may be required by SEBI from time to time. 12. Removal of Difficulties If any difficulty arises in giving effect to the provisions of this Scheme, SEBI may, at the written request of CoSE, relax any of the provisions of this Scheme. *********