Annexure - A
1. Title and Commencement
1.1 This Scheme shall be called The Stock Exchange - Ahmedabad (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 The Stock Exchange - Ahmedabad (hereinafter referred to as “ASE”) 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 ASE 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 “Ahmedabad Stock Exchange Limited” (ASEL) means the company incorporated under section 12 of the Companies Act, 1956 vide certificate of incorporation dated March 4, 2005 for the purpose of assisting, regulating or controlling the business of buying, selling or dealing in securities as a recognised stock exchange and to succeed ASE.
2.2 “Due Date” means the date, as may be determined by the Governing Board of ASE, 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.
2.3 “Governing Board” means the Board of Directors of ASEL.
2.4 “Member” means a person who is a member of ASE as per the register of members maintained by ASE under Rule 64 of the Rules, Bye-Laws and Regulations, 1957 of ASE.
2.5 “Record Date” means the date, prior to the Due Date, fixed by the Governing Board of ASE for determining the Members who will be entitled to shares of ASEL pursuant to clause 4 of this Scheme.
2.6 “Shareholder” means a person who holds any equity share(s) of ASEL.
2.7 “The Stock Exchange - Ahmedabad” (ASE) means an unincorporated association of persons having its principal place of business at Kamdhenu Complex, Opposite Sahjanand College, Panjarapole, Satellite, Ahmedabad- 380 015, which has been recognised as a stock exchange by and under notification No. SRO 2945 dated 16th September,1957 and permanently recognised as a stock exchange by and under notification No. S.O. 107(E) vide F.No.: F.1/32/SE/80 dated 1st March, 1982 by the Central Government under the SCRA.
2.8 “Trading Member” means a stock broker of ASEL and registered with SEBI as such under the SEBI (Stock Brokers and Sub-Brokers) Regulations, 1992.
2.9 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 or the Rules, Bye-Laws and Regulations, 1957 shall have the same meanings respectively assigned to them in the above mentioned Acts, 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 ASEL 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 incorporation of ASEL) as on the Record Date shall be entitled to 10,000 fully paid-up equity shares of the face value of Re.1/- each for cash at par of ASEL.
4.2 Every Member or his nominee, as the case may be, who has more than one membership card as on the Record Date, shall be entitled to additional 10,000 fully paid-up equity shares of face value of Re.1/- each for cash at par for every additional membership card held by him
4.3 ASEL 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 ASE or a Member whose membership is the subject matter of any proceedings before the court, tribunal or authority shall be held in abeyance till the suspension or legal proceedings continues, as the case may be.
4.4 The invitation to subscribe to, and the offer, issue and allotment of equity shares of ASEL pursuant to this clause shall not be considered as being an invitation, offer, issue or allotment to the public.
5. Listing of Shares
ASEL may at any time list its securities on any recognised stock exchange.
6. Transfer to ASEL
Pursuant to this Scheme, on and from the Due Date:
6.1 all assets, properties, undertakings, business, books, records, registers, funds, reserves, rights (including, in particular, intellectual property rights, leasehold rights, tenancy rights if any and all rights of nomination of former Members which have vested in ASE), powers, authorities, interests, privileges, exemptions, permissions, licenses, registrations and recognitions (including, in particular, the recognition of ASE as a recognized stock exchange under the SCRA) of or belonging to or in the possession or control of ASE or to which ASE may be entitled, including those held by any trustees in trust for ASE or for the Members of ASE or for the objects and purposes of ASE, and including those vested in or held by any committee of ASE, shall stand transferred to and shall vest in and shall be in the possession or control of and shall become the entitlement of ASEL, and ASEL shall have the same right, title and interest therein or thereto as ASE and such trustees or committees had immediately prior to the Due Date.
6.2 all obligations and liabilities of ASE shall stand transferred to and shall become obligations and liabilities of ASEL.
6.3 ASEL shall, in place and stead of ASE, become a party to, and shall be bound by and entitled to, all contracts, agreements and other instruments to which ASE is a party or by which ASE is bound or to which ASE is entitled, and the same may be enforced and acted upon by or against ASEL accordingly.
6.4 all notices, actions, claims and proceedings (including all legal, quasi legal, revenue, disciplinary and arbitration notices, actions and proceedings and including also disciplinary, suspension, default, delisting and other notices, actions and proceedings by ASE to or against the Members any companies and others) of, by or against ASE shall not abate and shall be deemed to be made, instituted or continued by or against ASEL in place and stead of ASE.
6.5 the employees of ASE shall become the employees of ASEL in place and stead of ASE on the same terms and conditions as existing immediately prior to the Due Date.
6.6 notices and circulars issued and acts done by the Governing Board of ASE shall, unless and until such notices and circulars are modified or rescinded by the Governing Board, continue to subsist in relation to ASEL and shall be deemed to have been issued and done by the Governing Board.
6.7 all resolutions passed and acts done by the Governing Board of ASE or general body of Members shall, unless and until modified or rescinded by Governing Board or general body of Shareholders of ASEL, as the case may be, continue to subsist in relation to ASEL and shall be deemed to have been passed and done by the Governing Board or general body of Shareholders of ASEL, as the case may be.
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 become 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 Rules, Bye-laws and Regulations of ASEL.
8.4 ASEL 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 ASEL in the manner specified in the Rules, Bye-laws and Regulations of ASEL.
8.6 Irrespective of the date or mode of acquisition of trading right, the Trading Members of ASEL shall have uniform rights and privileges:
Provided that ASEL may, with the prior approval of SEBI, grant additional privileges to those Trading Members who were Members on the day preceding the Due Date.
8.7 Trading Members of ASEL 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.
8.8 Trading Members of ASEL shall be bound by all obligations and liabilities towards their clients and constituents, SEBI, ASE 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.
9. Shareholding Rights
9.1 ASEL 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.
9.2 On and from the Appointed Date, ASEL 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 of any recognised Stock Exchange, 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 ASEL.
10. Dissolution of ASE
On and from the Due Date, ASE shall stand dissolved and ASEL shall be entitled to, and shall commence business and operations as the successor of ASE.
11. Memorandum and Articles of Association, etc
11.1 The Rules, Bye-laws and Regulations of ASE on the day preceding the Due Date shall, unless contrary to or inconsistent with or excluded by this Scheme, apply to ASEL on and from the Due Date.
11.2 ASEL 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 Memorandum and Articles of Association, Rules, Bye-Laws and Regulations of ASEL 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 ASEL 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.
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 ASEL shall be carried out by the clearing and settlement mechanism as used by ASE at present or in such other manner as the Governing Board may determine.
13. Utilisation of Assets and Reserves
13.1 ASEL shall not do anything contrary to the provisions of section 4B (3) of the SCRA.
13.2 Without prejudice to the generality of the provisions in clause 13.1, ASEL shall not use the assets and reserves of ASE, as on the date of publication of this Scheme, transferred to it under clause 6.1 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.
14. Compliance with this scheme
14.1 ASE and ASEL, 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.
14.2 Without prejudice to the generality of the provisions in clause 14.1, ASE and ASEL, as the case may be, shall continuously comply with the provisions in clauses 3.1, 7, 8.3, 8.4, 8.5, 8.6, 9.2, 9.3, 11.3 and 13.
14.3 ASE and ASEL, 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.
15. Removal of Difficulties
If any difficulty arises in giving effect to the provisions of this Scheme, SEBI may, at the written request of ASE or ASEL, as the case may be, relax any of the provisions of this Scheme.
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