Corporatisation of Stock Exchanges by which Ownership, Management, and Trading Membership would be segregated from each other. Administrative steps will be taken and legislative changes. - S.O. No.596(E) - SEBI/LE/8716/02 - SEBI

SECURITIES AND EXCHANGE BOARD OF INDIA NOTIFICATION Mumbai, the 3rd June, 2002 S.O.596(E).- Whereas the Hon'ble Finance Minister had announced in the Parliament on March 13, 2001, that corporatisation of stock exchanges by which ownership, management, and trading membership would be segregated from each other. Administrative steps will be taken and legislative changes, if required, will be proposed accordingly. In accordance with the above, policy announcement, The Securities and Exchange Board of India (hereinafter referred to as SEBI ) had discussed the issue of demutualisation with the stock exchanges from time to time and Whereas SEBI Board in its meeting held on December 28, 2001, discussed the issue of demutualisation of the stock exchanges and decided that henceforth no broker member shall be an office bearer of an exchange that is hold the position of the President, Vice-President, Treasurer etc., and the other administrative and legal modalities for corporatisation and demutualisation of exchanges of the stock exchanges are being worked out; and Whereas subsequently, SEBI directed all the exchanges including The Calcutta Stock Exchange Association Ltd. (hereinafter referred to as CSE ) vide circular no. SMD/POLICY/CIR-2/2002 dated January 10, 2002, to implement the SEBI Board decision by suitably amending their Rules, Articles of Association etc., within two months from the date of the said Order; and Whereas SEBI advised C7SE vide letter no. SMD/CSE/ADMN/4536/02 dated March 19, 2002 to confirm whether they had complied with the SEBI directive of January 10, 2002, issued vide SEBI Circular no. 2, whereby no broker member was allowed to hold office as President, Vice-President within a period of two months from the date of the directive and CSE was also advised to confirm whether they had suitably amended the Rules, Articles of Association etc., to give effect to the above decision taken by the SEBI Board and the policy decision of government in this regard; and Whereas in response to the above mentioned letter and circular dated January 10) 2002, CSE vide its letter dated 19.3.2002 informed that the said directive shall be incorporated after implementation of model rules of conduct and that appropriate changes will be made in the memorandum and articles of association of the exchange after its approval by the committee/SEBI/general body of shareholders, that the process has been initiated and Whereas most of the stock exchanges have amended their rules/articles of association to give effect to the order of 10.1.2002, and there is failure on the part of CSE to amend the articles of association in the light of the above, SEBI is of the opinion that in the interests of the investors and the capital markets, as also in public interest, it is necessary and expedient to amend the Articles of Association, in the manner indicated in this Order, inter-alia for the following reasons namely: (i) To expedite the corporatisation of stock exchanges by which ownership, management, and trading membership would be segregated from each other to improve institutional mechanism and trading practices in the stock markets, (ii) Moreover, the Board finds it desirable to maintain uniformity in the Rules, Regulations and Bye-laws regarding composition of the Governing Board of various stock exchanges in the country. Now, therefore in exercise of the powers conferred by Sub-section 2 of Section 8 of the Securities Contracts (Regulation) Act, 1956 read with the powers delegated to the Board by the SEBI under its notification no. S.O / 573(E) dated July 3, 1992 issued under Section 29A of the said Act, Securities and Exchange Board of India makes the following amendments to the Articles of Association of CSE namely:- 1. In clause (i) Article 82E, the word elected appearing after the words amongst the and before the word member shall be deleted 2. In clause (i) of Article 82 E, after the existing proviso, the following proviso shall be added: Provided further that no broker member of the exchange shall be an office bearer i.e. President, Vice President or Treasurer of the exchange. [F.No.SEBI/LE/8716/02] G.N. BAJPAI, Chairman