Order Under Section 4b (6) read with Section 4b (7) of the Securities Contracts (Regulation) Act, 1956 in the matter of the Saurashtra Kutch Stock Exchange Limited (Corporatisation and Demutualisation) Scheme, 2005. - S.O. No.1318(E) - SEBI/MRD/49405/2005 - SEBI

SECURITIES AND EXCHANGE BOARD OF INDIA NOTIFICATION Mumbai, the 15th September, 2005 S.O. No.1318 (E). 1.0 The Saurashtra Kutch Stock Exchange Limited (hereinafter referred to as the SKSE ), registered under the Companies Act, 1956 initially as a company limited by guarantee and re-registered as a company limited by shares vide certificate of incorporation dated March 16, 2005, is a recognised stock exchange having its principal place of business at Popatbhai Sorathia Bhavan, Sadar Bazar, Rajkot 360001. It is required to be corporatised and demutualised in accordance with the provisions of the Securities Contracts (Regulation) Act, 1956 (hereinafter referred to as the SCRA ). 2.0 SKSE, vide its letter dated January 29, 2005, submitted a scheme for its corporatisation and 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. Vide letter dated March 17, 2005, it submitted that it has been re-registered as a company limited by shares under section 32 of the Companies Act vide certificate of incorporation dated March 16, 2005 issued by Registrar of Companies, Gujarat, Dadra and Nagar Haveli. SEBI, vide its letter dated May 25, 2005, advised SKSE 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 SKSE. 3.0 Thereafter, SKSE, vide its letter dated June 17, 2005 submitted a revised scheme. SEBI made enquiries and obtained information from SKSE through a meeting on June 24, 2005. Based on the discussions during the said meeting, SKSE desired to resubmit the scheme. 4.0 Accordingly, SKSE, vide its letter dated July 26, 2005 submitted a further revised scheme (hereinafter referred to as the Scheme ) to SEBI for approval 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 corporatisation and demutualisation of SKSE. 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 SKSE 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 rights to amend, alter or modify the Scheme in the interest of the trade and in the public interest and in furtherance of the objectives of the corporatisation and 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/49405/2005] M. DAMODARAN, Chairman Encl: Annexure A THE SAURASHTRA KUTCH STOCK EXCHANGE LIMITED (CORPORATISATION AND DEMUTUALISATION) SCHEME, 2005 1. Title and Commencement 1.1 This Scheme shall be called the Saurashtra Kutch Stock Exchange Limited (Corporatisation and 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 Saurashtra Kutch Stock Exchange Limited (hereinafter referred to as SKSE ) shall be corporatised and 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 SKSE 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 Due Date means the date, as may be determined by the Governing Board of SKSE, 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. 2.2 Governing Board means the Board of Directors of SKSE. 2.3 Member means a person who is a member of SKSE as per the register of Members maintained by it. 2.4 Saurashtra Kutch Stock Exchange Limited (SKSE) means the company limited by guarantee initially and re-registered as a company limited by shares under section 32 of the Companies Act, 1956 vide certificate of incorporation dated March16, 2005, having its registered office and principal place of business at Popatbhai Sorathia Bhavan, Sadar Bazar, Rajkot - 360001 and recognised as a Stock Exchange by the Central Government under SCRA by and under notification No. F.No.1/39/SE/86 July 19, 1989. 2.5 Shareholder means a person who holds any equity share(s) of SKSE. 2.6 Trading Member means a stock broker of SKSE 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 Securities Contracts (Regulation) Act, 1956, the Companies Act, 1956, the rules and regulations made under these Acts, Memorandum and Articles of Association, Rules, Bye-Laws and Regulations of SKSE 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 SKSE 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. Allotment of Shares 4.1 Every Member or his nominee, as the case may be, (other than the Members who have subscribed to equity shares at the time of re-registration of SKSE) shall be entitled to 50 fully paid-up equity shares of the face value of Re.100/- each for cash at par of SKSE. 4.2 SKSE shall allot the equity shares to the entitled Members or their nominees, as the case may be, by the Due Date: Provided that the allotment to a Member suspended by SKSE shall be held in abeyance till the suspension continues. 4.3 The invitation to subscribe to, and the offer, issue and allotment of equity shares of SKSE pursuant to this clause shall not be considered as being an invitation, offer, issue or allotment to the public. 5. Listing of Shares SKSE may at any time list its securities on any recognised stock exchange. 6. Demutualisation 6.1 A Trading Member may or may not be a Shareholder. 6.2 A Shareholder may or may not be a Trading Member. 7. Trading Rights 7.1 A Member, who is registered as a stock broker on the day preceding the Due Date, shall become a Trading Member on the Due Date. 7.2 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 within a period of three months from the Due Date. 7.3 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 SKSE. 7.4 SKSE 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. 7.5 A Trading Member may surrender his membership to SKSE in the manner specified in the Rules, Bye-laws and Regulations of SKSE. 7.6 Irrespective of the date or mode of acquisition of trading right, the Trading Members shall have uniform rights and privileges: Provided that SKSE may, with the prior approval of SEBI, grant additional privileges to those Trading Members who were Members on the day preceding the Due Date. 7.7 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 trading on SKSE before the Due Date. 7.8 Trading Members shall be bound by all obligations and liabilities towards their clients and constituents, SEBI, SKSE and other authorities or other persons arising out of or under any act, omission or contract or law, notification, order, direction, etc. while trading on SKSE before the Due Date. 8. Shareholding Rights 8.1 SKSE shall ensure that at least 51% of its equity shares are held by public other than shareholders having trading rights in the manner and within the period prescribed in sub-section (8) of section 4B of the SCRA. 8.2 On and from the Appointed Date, SKSE shall ensure that public other than shareholders having trading rights continuously hold at least 51% of equity shares. 8.3 On and from Due Date, no Shareholder, who is a Trading Member, shall have voting rights (taken together with voting rights held by him and by persons acting in concert with him) exceeding 5% of the voting rights in SKSE. 9. Memorandum and Articles of Association, etc. 9.1 The Memorandum and Articles of Association, Rules, Bye-laws and Regulations of SKSE on the day preceding the Due Date shall, unless contrary to or inconsistent with or excluded by this Scheme, apply to it on and from the Due Date. 9.2 SKSE shall incorporate the provisions of this Scheme appropriately in its Memorandum and Articles of Association, Rules, Bye-laws and Regulations on or before the Due Date. 9.3 The Memorandum and Articles of Association, Rules, Bye-laws and Regulations of SKSE 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. 10. Transfer of Clearing and Settlement Functions 10.1 SKSE 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 SCRA. 10.2 Until the duties and functions of the clearing house are transferred as provided in clause 10.1 above, the clearing and settlement functions in relation to trading on SKSE shall be carried out by the clearing and settlement mechanism as used by SKSE at present or in such other manner as the Governing Board may determine. 11. Utilisation of Assets and Reserves 11.1 SKSE shall not do anything contrary to the provisions of section 4B (3) of the SCRA. 11.2 Without prejudice to the generality of the provisions in clause 11.1, SKSE 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. 12. Compliance with this Scheme 12.1 SKSE shall ensure compliance with the provisions of this Scheme at all times and shall not do anything contrary to the provisions of this Scheme. 12.2 Without prejudice to the generality of the provisions in clause 12.1, SKSE shall continuously comply with the provisions in clauses 3.1, 6, 7.3, 7.4, 7.5, 7.6, 8.2, 8.3, 9.3 and 11. 12.3 SKSE shall report compliance with the provisions of this Scheme in such manner as may be required by SEBI from time to time. 13. Removal of Difficulties If any difficulty arises in giving effect to the provisions of this Scheme, SEBI may, at the written request of SKSE, relax any of the provisions of this Scheme. ************