Annexure A
THE VADODARA STOCK EXCHANGE LIMITED (CORPORATISATION AND DEMUTUALISATION) SCHEME, 2005
1 Title and Commencement
1.1 This Scheme shall be called the Vadodara 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 the “SCRA”).
1.3 Vadodara Stock Exchange Limited (hereinafter referred to as “VSE”) 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 VSE 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, 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 VSE.
2.3 “Member” means a person who is a Member of VSE on the day preceding the date of re-registration as per the Register of Members maintained by it.
2.4 “Shareholder” means a person who holds any equity share(s) in VSE.
2.5 “Trading Member” means a stock broker of VSE and registered with SEBI as such under the SEBI (Stock Brokers and Sub-Brokers) Regulations, 1992.
2.6 “Vadodara Stock Exchange Limited“ (VSE) means the company limited by guarantee, having its principal place of business at 3rd Floor, Fortune Tower, Vadodara – 390 005 and recognised as a Stock Exchange by the Central Government and which shall be re-registered as a company limited by shares, in pursuance of clause 3 of this Scheme.
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 SCRA, the Companies Act, 1956, the Rules and Regulations under these Acts, Memorandum and Articles of Association, the Rules, Bye-Laws and Regulations of VSE 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 VSE shall get itself re-registered, prior to the Due Date, as a company limited by shares under section 12 of the Companies Act, 1956, in the name and style of “Vadodara 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 1,000 fully paid up equity shares of Rs.10/- each for cash at par, 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 VSE 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 VSE 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) 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 under clause 3.2 of this Scheme) shall be entitled to 1,000 fully paid-up equity shares of the face value of Rs.10/- each for cash at par of VSE.
5.2 VSE 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 shall be held in abeyance
Provided further that a Member having outstanding dues towards VSE shall be allotted shares on clearing the dues within 6 months from Due Date.
5.3 The invitation to subscribe to, and the offer, issue and allotment of equity shares of VSE pursuant to this clause shall not be considered as being an invitation, offer, issue or allotment to the public.
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) Regulation, 1992 within 3 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 VSE.
7.4 VSE 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 VSE in the manner specified in the Rules, Bye-laws and Regulations of VSE.
7.6 Irrespective of the date or mode of acquisition of trading right, the Trading Members shall have uniform rights and privileges:
Provided that VSE may, with the prior approval of SEBI, grant additional privileges to those Trading Members who were Members on the day preceding the date of re-registration.
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 VSE before Due Date.
7.8 Trading Members shall be bound by all obligations and liabilities towards their clients and constituents, SEBI, VSE 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 VSE before Due Date.
8 Shareholding Rights
8.1 VSE 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, VSE shall ensure that public, other than shareholders having trading rights shall 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 3% of the voting rights in VSE.
9 Memorandum and Articles of Association, etc.
9.1 Memorandum and Articles of Association, Rules, Bye-laws and Regulations of VSE 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 VSE shall incorporate the provisions of this Scheme appropriately in its Memorandum and Articles of Association, Rules, Bye-laws and Regulations of VSE on or before the Due Date.
9.3 The Memorandum and Articles of Association, Rules, Bye-laws and Regulations of VSE 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 VSE 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 VSE 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, the clearing and settlement functions in relation to trading on VSE shall be carried out by the clearing and settlement mechanism as used by VSE at present or in such other manner as the Governing Board may determine.
11 Utilisation of Assets and Reserves
11.1 VSE 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, VSE shall not use the 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 the business operations of stock exchange.
12 Compliance with this Scheme
12.1 VSE 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 12.1, VSE shall continuously comply with the provisions in Clauses 4.2, 6, 7.3, 7.4, 7.5, 7.6, 8.2, 8.3, 9.3 and 11.
12.3 VSE 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 VSE, relax any of the provisions of this Scheme.
******************