Order under section 4B (6) read with Section 4B (7) of the Securities Contracts (Regulation) Act, 1956 in the matter of the Pune Stock Exchange Limited (Corporatisation and Demutualisation) Scheme, 2005. - S.O. No.1202(E) - SEBI/MRD/48109/2005 - SEBI

SECURITIES AND EXCHANGE BOARD OF INDIA NOTIFICATION Mumbai, the 29th August, 2005 S. O. 1202 (E). 1.0 Pune Stock Exchange Limited (hereinafter referred to as PSE ), registered under the Companies Act, 1956 as a company limited by guarantee, is a recognised stock exchange having its principal place of business at Shivleela Chambers, 752, Sadashivpeth, R.B. Kumthekar Marg, Pune 411 030. It is required to be corporatised and demutualised in accordance with the Securities Contracts (Regulation) Act, 1956 (hereinafter referred to as the SCRA ). 2.0 PSE, vide its letter dated January 28, 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. SEBI vide letter dated May 25, 2005 advised PSE to submit a revised Scheme after taking into account the provisions of the BSE (Corporatisation and Demutualisation) Scheme, 2005 that may be relevant and applicable to PSE. 3.0 Accordingly, PSE, vide its letter dated June 14, 2005 submitted a revised scheme for its corporatisation and demutualisation after taking into account the provisions of the BSE Scheme. SEBI made enquiries from PSE through a meeting on June 23, 2005. Based on the discussions during the said meeting, PSE desired to resubmit the scheme. Vide letter dated June 28, 2005, it submitted a further revised scheme (hereinafter referred to as the Scheme ) for its corporatisation and demutualisation to SEBI for approval. 4.0 The Scheme, inter alia, provides for the re-registration of PSE as a company limited by shares, segregation of ownership and management from the trading rights of the members, restriction on voting rights of the 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 PSE. 5.0 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. 6.0 PSE 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. 7.0 SEBI reserves the right 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. 8.0 The Scheme shall come into effect on the day of its publication in the Official Gazette. [F. No. SEBI/MRD/48109/2005] M. DAMODARAN, Chairman Encl: Annexure A Annexure - A THE PUNE STOCK EXCHANGE LIMITED (CORPORATISATION AND DEMUTUALISATION) SCHEME, 2005 1. Title and Commencement 1.1 This Scheme shall be called the Pune 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 Pune Stock Exchange Limited (hereinafter referred to as PSE ) 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 PSE 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 PSE, 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 PSE. 2.3 Member means a person who is a member of PSE on the day preceding the date of re-registration, as per the register of members maintained by it. 2.4 Pune Stock Exchange Limited means the company limited by guarantee registered under the Companies Act, 1956 having its principal place of business at Shivleela Chambers, 752, Sadashivpeth, R.B. Kumthekar Marg, Pune 411 030 and recognised as a Stock Exchange by the Central Government under the SCRA and which shall be re-registered as a company limited by shares in pursuance to clause 3 of this Scheme. 2.5 Shareholder means a person who holds any equity share(s) of PSE. 2.6 Trading Member means a stock broker of PSE 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 the 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 under these Acts, Memorandum and Articles of Association, the Rules, Bye-Laws and Regulations of PSE 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. Re-registration 3.1 PSE shall re-register itself, prior to Due Date, as a company limited by shares under section 12 of the Companies Act, 1956, in the name and style of Pune Stock Exchange Limited , in accordance with section 32 of the Companies Act, 1956. 3.2 The Members, as may be identified by the Governing Board, shall each subscribe to and pay for 5,000 fully paid up equity shares of Re.1/- each for cash at par of PSE, for the purpose of its re-registration. 4. Governing Board 4.1 The first Governing Board on re-registration shall comprise of Directors as are named as first directors in the Articles of Association of PSE, subject to the condition that the representatives of the Members do not exceed one-fourth of the total strength of the Governing Board. 4.2 The Governing Board, on and from Due Date, shall be constituted in accordance with the provisions of the Articles of Association of PSE 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. 4.3 Notwithstanding anything contained in clause 4.2, SEBI may nominate directors on the Governing Board as and when deemed fit. 5. Allotment of Shares 5.1 Every Member or his nominee, as the case may be, (other than the members who have subscribed pursuant to clause 3.2) shall be entitled to 5,000 fully paid-up equity shares of the face value of Re.1/- each for cash at par of PSE. 5.2 Every Member or his nominee, as the case may be, who has more than one membership card, shall be entitled to additional 5,000 fully paid-up equity shares of face value of Re.1/- each for cash at par for every additional membership card held by him. 5.3 PSE 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 of shares to a Member suspended by PSE shall be kept in abeyance till the suspension continues; Provided further that the allotment of shares in respect of defaulter members or where the matter is sub-judice shall be made on fulfillment of all requisite formalities. 5.4 The invitation to subscribe to, and the offer, issue and allotment of equity shares of PSE pursuant to this clause shall not be considered as being an invitation, offer, issue or allotment to the public. 6. Listing of Shares PSE may at any time list its securities on any recognized stock exchange. 7. Demutualisation 7.1 A Trading Member may or may not be a Shareholder. 7.2 A Shareholder may or may not be a Trading Member. 8 Trading Rights 8.1 A Member, who is registered as a stock broker on the day preceding the Due Date, shall be a Trading Member on the Due Date. 8.2 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 3 months from the Due date. 8.3 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 Memorandum and Articles of Association and Bye-laws of PSE. 8.4 PSE 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. 8.5 A Trading Member may surrender his membership to PSE in the manner specified in the Articles of Association and Bye-laws of PSE. 8.6 Irrespective of the date or mode of acquisition of trading right, the Trading Members shall have uniform rights and privileges. 8.7 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 PSE before Due Date. 8.8 Trading Members shall be bound by all obligations and liabilities towards their clients and constituents, SEBI, PSE 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 PSE before Due Date. 9. Shareholding Rights 9.1 PSE 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 sub-section (8) of Section 4B of the SCRA. 9.2 On and from the Appointed Date, PSE shall ensure that public other than shareholders having trading rights continuously hold at least 51% of equity shares. 9.3 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 PSE. 10. Utilisation of Assets and Reserves 10.1 PSE 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 in clause 10.1, PSE 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 on the date of publication of this Scheme or the business operations of the stock exchange. 11. Memorandum and Articles of Association, etc. 11.1 The Memorandum and Articles of Association, Rules, Bye-laws and Regulations of PSE shall, unless contrary to or inconsistent with or excluded by this Scheme, apply to it on and from the Due Date. 11.2 PSE 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. 11.3 The Memorandum and Articles of Association, Rules, Bye-laws and Regulations of PSE 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 12. Transfer of Clearing and Settlement Functions 12.1 PSE shall, within two years of the Due Date, subject to the prior approval of SEBI, transfer the duties and functions of the clearing house of PSE to a clearing corporation recognised under the SCRA. 12.2 Until the duties and functions of the clearing house are transferred as provided in clause 12.1, the clearing and settlement functions in relation to trading on PSE shall be carried out by the clearing and settlement mechanism as used by PSE at present or in such other manner as the Governing Board may determine. 13. Compliance with this Scheme 13.1 PSE shall ensure compliance with the provisions of this Scheme at all times and shall not do anything contrary to the provisions of this Scheme. 13.2 Without prejudice to the generality of the provisions in 12.1, PSE shall continuously comply with the provisions in clauses 4.2, 7, 8.3, 8.4, 8.5, 8.6, 9.2, 9.3, 10 and 11.3. 13.3 The Pune Stock Exchange Investors Protection Fund Trust, the Settlement Guarantee Fund and Investors Service Fund of PSE shall continue in the same form / style and shall be utilized for the same purposes for which they have been setup, unless specified otherwise by SEBI. 13.4 PSE shall report compliance with the provisions of this Scheme in such manner as may be required by SEBI from time to time. 14 Removal of Difficulties If any difficulty arises in giving effect to the provisions of this Scheme, SEBI may, at the written request of PSE, relax any of the provisions of this Scheme. *********