SECURITIES AND EXCHANGE BOARD OF INDIA
SECONDARY MARKET DEPARTMENT
Mittal Court, A Wing, Gr. Floor,
224, Nariman Point, Mumbai 400 021
SMD/POLICY/IECG/CIR-14/97
June 11, 1997
To,
President / Executive Director / Managing Director,
All Exchanges
Dear Sir,
SEBI had convened the meeting of the executive committee of the Inter-exchange Co-ordination group to discuss the issue relating to the funds/securities delivered in the market which is held in the name of or belonging to CRB Capital Markets Limited and the other CRB Group Companies. The group met on Monday June 9, 1997. The minutes of the meeting are enclosed herewith. The minutes enumerate the course of action decided in the meeting regarding the above issue.
Your Faithfully,
N. PARAKH
DIVISION CHIEF
SECONDARY MARKET DEPARTMENT
Minutes of the Meeting of the Executive Committee of the Inter-Exchange Co-ordination Group (IECG) held at the office of SEBI on June 9, 1997.
SEBI convened the meeting of the IECG to discuss the issue relating to the funds/securities delivered in the market which is held in the name of or CRB Capital Market Limited and the other CRB Group Companies. The Reserve Bank of India had moved the Hon’ble High Court of Delhi and an Official Liquidator was appointed in the case of CRB Capital Markets Limited. Similarly, SEBI also has appointed an administrator in the case of CRB Mutual Fund. However, these entities had delivered shares of various companies in the markets. Since, the assets of these companies vests with the Liquidator and the administrator, the exchanges decided that the shares delivered by these entities will be bad for circulation. Some exchanges represented to us the need to identify a cut off date for declaring the deliveries as bad deliveries. Some exchanges had frozen the delivery and the payments and wanted clarification on whether the money or the shares are to be retained. In order to discuss the issues the meeting of the executive committee of the IECG was called. The meeting was attended by the following :
Dr. R H Patil NSE
Shri. Ravi Narain NSE
Shri R C Mathur BSE
Shri Dinesh Singhania CSE
Shri M Bajaj CSE
Shri K L Jain JSE
Dr. J N Dhankar JSE
Shri Jnandev Kamath Mangalore SE
Shri. VSE
Shri M L Soneji ASE
The meeting was co-ordinated by Shri L K Singhvi and Shri O P Gahrotra, both Senior Executive Directors. The other SEBI Officials who attended the meeting were as under:
Shri Vijay Ranjan ED
Ms. D N Raval ED
Shri P Kar ED
Shri C M Mehra JT. C. O. I.
Shri R C Gupta DC
Shri R V Nabar DC
Shri P K Kuriachen DC
Shri D Chanda DC
The representative of Reserve Bank of India Shri Chugh was also present.
The issues relating to the Bad Deliveries of the CRB Capital Market and the other CRB group Companies was discussed. It was decided to initiate the following course of action :
- In the case of CRB Mutual Fund a transaction entered in to by the Mutual Fund pending delivery or for which delivery has not been received/given by the custodian on or after June 03, 1997, shall be treated as bad for circulation for the time being . In case money has already been paid by the buyers and received by the Stock Exchanges (SEs), it may be in the interest of the unit holders if it is transferred to the administrator to satisfy the claims of the unit holders. However, this is a matter in which administrator will seek suitable orders from the court. Administrator has informed that he intends to move the court. On receiving clarifications of the court, SEs will be advised about release of securities or the funds to the buyers.
- For the deliveries that have taken place prior to June 3, 1997 i.e. the day of appointment of the administrator, the decision of the court may be necessary for considering the validity of the transactions. For this the court has to be moved for necessary orders and prescribing certification process, along with the period for which such transactions are to be re-opened even if transfer has already been effected. Administrator informed that he is already planning to move the court on this issue also.
- For CRB Capital Markets Ltd. also RBI may like to consider similar action, as outlined above, taken through the liquidator .
- Investment in securities listed on any one or more stock exchanges, made by any of the listed and/or unlisted companies which is a group company and/ or in which CRB group has controlling interest, will also need to be subjected to attestation. RBI may seek appropriate orders from the High Court.
- For CRB Daewoo Securities SEBI has received a copy of representation which they have sent to RBI claiming that they are not CRB group company as CRB holds 24% shares and two foreign companies hold balance 76 % shares . RBI is requested to take an early view on this issue. After getting decision from RBI, SEBI would inform the Stock Exchanges.
- Regarding CRB MF custodian i.e. IIT Corporate Services Ltd., it was informed that they are moving Mumbai High Court for suitable release .
The exchanges are advised to take a note of the same.