Order under Section 4B (6) read with Section 4B (7) of the Securities Contracts (Regulation) Act, 1956 in the matter of the Madras Stock Exchange Limited (Corporatisation and Demutualisation) scheme, 2005. - S.O. No.1200(E) - SEBI/MRD/48108/2005 - SEBI

SECURITIES AND EXCHANGE BOARD OF INDIA Mumbai, the 29th August, 2005 S. O. 1200 (E). 1.0 The Madras Stock Exchange Limited (hereinafter referred to as the MSEL ), registered under the Companies Act, 1956 as a company limited by guarantee, is a recognised stock exchange having its principal place of business at No. 30 (old No. 11), Second Line Beach, Chennai 600001. 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 MSEL, 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 its letter dated May 25, 2005 advised MSEL 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 MSEL. 3.0 Thereafter, MSEL, vide its letter dated June 07, 2005 submitted a revised scheme after taking into account the provisions of the BSE scheme. SEBI made enquiries and obtained information from MSEL through a meeting on June 27, 2005. Based on the discussions during the said meeting, MSEL desired to resubmit the scheme. 4.0 Accordingly, MSEL, vide its letter dated June 28, 2005 submitted a further revised scheme (hereinafter referred to as the Scheme ) for its corporatisation and demutualisation to SEBI for approval in accordance with the provisions of the SCRA. 5.0 The Scheme, inter alia, provides for the re-registration of MSEL as a company limited by shares, 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 MSEL. 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 MSEL 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/48108/2005] M. DAMODARAN, Chairman Encl: Annexure A Annexure A THE MADHYA PRADESH STOCK EXCHANGE (CORPORATISATION AND DEMUTULISATION) SCHEME, 2005 1. Title and Commencement 1.1 This Scheme shall be called the Madhya Pradesh Stock Exchange (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 Madhya Pradesh Stock Exchange (hereinafter referred to as MPSE ) 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 MPSE 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 MPSE, 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 Madhya Pradesh Stock Exchange Limited. 2.3 Madhya Pradesh Stock Exchange (MPSE) means an unincorporated association of persons having its principal place of business at Palika Plaza Phase II, 201, IInd floor, M. T. H. Compound, Indore 452 001 and recognized as Stock Exchange under the SCRA by and under notification No. 1/101/SE/88 dated 22/12/88. 2.4 Madhya Pradesh Stock Exchange Limited (MPSEL) means the company incorporated in pursuance of clause 3 of this Scheme for the purpose of assisting, regulating or controlling the business of buying, selling or dealing in securities as a recognized stock exchange and to succeed MPSE. 2.5 Member means a person who is a member of MPSE as per the register of members maintained by it. 2.6 Shareholder means a person who holds any equity share(s) of MPSEL. 2.7 Trading Member means a stock broker of MPSEL and registered with SEBI as such under the SEBI (Stock Brokers and Sub-Brokers) Regulations 1992. 2.8 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, the Rules, Bye-Laws and Regulations of MPSE shall have the same meanings respectively assigned to them in the above mentioned Acts, Rules, Bye-Laws and Regulations. 3. Incorporation of MPSEL The Members, as may be identified by the Governing Board of MPSE, shall each subscribe to 10,000 fully paid-up equity shares of the face value of Re.1/- each for cash at par, for the purpose of incorporation of a public company, limited by shares under section 12 of the Companies Act, 1956 in the name and style of Madhya Pradesh Stock Exchange Limited . 4. Governing Board 4.1 The first Governing Board shall comprise of such of the members of the Governing Board of MPSE on the date of incorporation of MPSEL as are named as first directors in the Articles of Association of MPSEL, 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 MPSEL in force from time to time: Provided that 4.2.1. 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 4.2.2. 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 of MPSEL 5.1 Every Member or his nominee, as the case may be, (other than the Members who have subscribed to equity shares under clause 3 of this Scheme) as on the date of incorporation of MPSEL shall be entitled to 10,000 fully paid-up equity shares of the face value of Re. 1/- each for cash at par. 5.2 MPSEL shall allot the equity shares to the entitled Members or their nominees, as the case may be, as referred to in clause 5.1, by the Due Date: Provided that the allotment to a Member suspended by MPSE shall be held in abeyance till the suspension continues. 5.3 The invitation to subscribe to, and the offer, issue and allotment of equity shares of MPSEL pursuant to this clause shall not be considered as being an invitation, offer, issue or allotment to the public. 6. Listing of Shares of MPSEL MPSEL may at any time list its securities on any recognised stock exchange. 7. Transfer to MPSEL Pursuant to this Scheme, on and from the Due Date: 7.1 all assets, properties, undertakings, business, books, records, registers, funds, reserves, rights including intangible rights, powers, authorities, interest, privileges, exemptions, permissions, licenses, registrations and recognitions (including, in particular, the recognition of MPSE as a recognized stock exchange under the SCRA) of or belonging to or in the possession or control of MPSE or to which MPSE may be entitled, including those held by any trustee in trust for MPSE or for the Members or for the objects and purposes of MPSE, and including those vested in or held by any committee of MPSE, shall stand transferred to and shall vest in and shall be in the possession or control of and shall become the entitlement of MPSEL, and MPSEL shall have the same right, title and interest therein or thereto as MPSE and such trustees or committees had immediately prior to the Due Date. 7.2 All obligations and liabilities of MPSE shall stand transferred to and shall become obligations and liabilities of MPSEL. 7.3 MPSEL shall, in place and stead of MPSE, become a party to, and shall be bound by and entitled to, all contracts, agreements and other instruments to which MPSE is a party or by which MPSE is bound or to which MPSE is entitled, and the same may be enforced and acted upon by or against MPSEL accordingly. 7.4 All notices, actions, claims and proceedings of, by or against MPSE shall not abate and shall be deemed to be made, instituted or continued by or against MPSEL in place and stead of MPSE. 7.5 The employees of MPSE shall become the employees of MPSEL in place and stead of MPSE on the same terms and conditions as existing immediately prior to the Due Date. 7.6 Notices and circulars issued and acts done by the Governing Board of MPSE shall, unless and until such notices and circulars are modified or rescinded by the Governing Board, continue to subsist in relation to MPSEL and shall be deemed to have been issued and done by the Governing Board. 7.7 All resolutions passed and acts done by the Governing Board of MPSE or general body of Members of MPSE shall, unless and until modified or rescinded by the Governing Board or General Body of shareholders of MPSEL, as the case may be, continue to subsist in relation to MPSEL and shall be deemed to have been passed and done by the Governing Board or General Body of shareholders of MPSEL, as the case may be. 8. Demutualisation 8.1 A Trading Member may or may not be a Shareholder. 8.2 A Shareholder may or may not be a Trading Member. 9. Trading Rights 9.1 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. 9.2 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. 9.3 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 MPSEL. 9.4 MPSEL 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. 9.5 A Trading Member may surrender his membership to MPSEL in the manner specified in the Rules, Bye-Laws and Regulations of MPSEL. 9.6 Irrespective of the date or mode of acquisition of trading right, the Trading Members shall have uniform rights and privileges: Provided that MPSEL may, with the prior approval of SEBI, grant additional privileges to those Trading Members who were Members on the day preceding the Due Date. 9.7 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 being Members on or before the Due Date. 9.8 Trading Members shall be bound by all obligations and liabilities towards their clients and constituents, SEBI, MPSE 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. 10. Shareholding Rights 10.1 MPSEL 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. 10.2 On and from the Appointed Date, MPSEL shall ensure that public other than shareholders having trading rights continuously hold at least 51% of equity shares. 10.3 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 MPSEL. 11. Dissolution of MPSE On and from the Due Date, MPSE shall stand dissolved and MPSEL shall be entitled to, and shall, commence business and operations as the successor of MPSE. 12. Memorandum and Articles of Association, etc. of MPSEL 12.1 The Rules, Bye-Laws and Regulations of MPSE on the day preceding the Due Date shall, unless contrary to or inconsistent with or excluded by this Scheme, apply to MPSEL on and from the Due Date. 12.2 MPSEL 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. 12.3 The Memorandum and Articles of Association, Rules, Bye-Laws and Regulations of MPSEL 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. 13. Transfer of Clearing and Settlement Functions of MPSEL 13.1 MPSEL 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. 13.2 Until the duties and functions of the clearing house are transferred as provided in clause 13.1, the clearing and settlement functions in relation to trading on MPSEL shall be carried out by the clearing and settlement mechanism as used by MPSE at present or in such manner as the Governing Board may determine. 14. Utilisation of Assets and Reserves 14.1 MPSEL shall not do anything contrary to the provisions of section 4B of the SCRA. 14.2 Without prejudice to the generality of the provisions in 14.1, MPSEL shall not use the assets and reserves of MPSE, as on the date of publication of this Scheme, transferred to it under clause 7 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. 15. Compliance with this Scheme 15.1 MPSE and MPSEL, as the case may be, shall ensure compliance with the provisions of this Scheme at all times and shall not do anything contrary to the provisions of this Scheme. 15.2 Without prejudice to the generality of the provisions in 15.1, MPSE and MPSEL, as the case may be, shall continuously comply with the provisions in clauses 4.2, 9.3, 9.4, 9.5, 9.6, 10.2, 10.3 and 14. 15.3 MPSE and MPSEL, as the case may be, shall report compliance with the provisions of this Scheme in such manner as may be required by SEBI from time to time. 16. Removal of Difficulties If any difficulty arises in giving effect to the provisions of this Scheme, SEBI may, at the written request of MPSE or MPSEL, as the case may be, relax any of the provisions of this Scheme. ************