THE BSE
(CORPORATISATION AND DEMUTUALISATION) SCHEME, 2005 1. ????? Title
and Commencement 1.1???? This Scheme shall be called The BSE
(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. 1.3 ??? BSE 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 (SEBI) in respect of BSE
under Section 4A of the Securities Contracts (Regulation) Act, 1956. Provided that the activities specified in the
respective clauses of this Scheme shall be implemented as per the time schedule
specified in those clauses. In this Scheme, unless the context otherwise requires,
- 2.1???? "Bombay Stock Exchange Limited"
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 BSE. 2.2???? "BSE" means the stock
exchange also known as "The Stock Exchange, Mumbai", an
unincorporated association of persons having its principal place of business at
Phiroze Jeejeebhoy Towers, Dalal Street, Fort, Mumbai, which has been recognized
by the Central Government under the Securities Contracts (Regulation) Act, 1956
by and under notification No. 17/2/56-SE/EAD dated August 31, 1957, and whose
name has been changed to BSE pursuant to the approval granted by SEBI by its
letter No.SMD/SEAID-I/BSE/592/02, dated 10thJanuary, 2002. 2.3???? "Due Date" means the date, as may be determined by the
Governing Board of BSE, 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 Securities
Contracts (Regulation) Act, 1956. 2.4 ??? "First Shareholders" means the fifty Members, selected
by the Governing Board of BSE, who will subscribe to the Memorandum of
Association and Articles of Association of Bombay Stock Exchange Limited for
the purpose of its incorporation. 2.5???? "Governing Board" means
the Board of Directors of Bombay Stock Exchange Limited. 2.6???? "Member"means a person who
is a member of BSE as per the register of members maintained by BSE under Rule
64 of the Rules, Bye-Laws and Regulations, 1957 and does not include a Limited
Trading Member of BSE. 2.7???? "Record Date"means the date, prior to the Due Date,
fixed by the Governing Board of BSE for determining the Members who will be
entitled to shares of Bombay Stock Exchange Limited pursuant to clause 5 of
this Scheme. 2.8???? "Rules, Bye-Laws and Regulations, 1957" means the
Rules, Bye-laws and Regulations, 1957 of BSE on the day preceding the Due Date. 2.9???? "Rules, Bye-Laws and Regulations of the Derivatives Segment"means
the Rules, Bye-laws and Regulations, 2000 of the Derivatives Segment of BSE on
the day preceding the Due Date. 2.10?? "Rules, Bye-Laws and Regulations of Bombay Stock Exchange
Limited"means the Memorandum of Association, the Articles of
Association and the Rules, Bye-laws and Regulations of Bombay Stock Exchange
Limited including the Rules, Bye-laws and Regulations of any segment of Bombay
Stock Exchange Limited. 2.11?? "Shareholder" means a person who holds any
equity share(s) of Bombay Stock Exchange Limited. 2.12?? "Trading Member"means a stock broker or trading member
or clearing member of any segment of Bombay Stock Exchange Limited and
registered with SEBI as such under the SEBI (Stock Brokers and Sub-Brokers)
Regulations 1992: Providedthat Bombay Stock Exchange Limited shall
not have clearing members after the clearing function is transferred to a
recognized clearing corporation under clause 13.1 of this Scheme. 2.13?? 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 Securities Contracts (Regulation) Act,
1956, the Companies Act, 1956, the rules and regulations made under these Acts,
the Rules, Bye-Laws and Regulations, 1957 or the Rules, Bye-laws and
Regulations of the Derivatives Segment shall have the same meanings
respectively assigned to them in the above mentioned acts, rules, bye-laws and
regulations. 3. ????? Incorporation
of Bombay Stock Exchange Limited 3.1???? The First Shareholders shall incorporate a
public company limited by shares under section 12 of the Companies Act, 1956 in
the name and style of "Bombay Stock Exchange Limited". 3.2???? The First Shareholders shall each subscribe
to and pay for 10,000 fully paid-up equity shares of the face value of Re.1/-
each for cash at par of Bombay Stock Exchange Limited. 4. ????? Governing
Board of Bombay Stock Exchange Limited 4.1???? The first Governing Board shall comprise of
such of the members of the Governing Board of BSEon the date of incorporation
of Bombay Stock Exchange Limited as are named as first directors in the
Articles of Association of Bombay Stock Exchange Limited, 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 first Governing Board mayhold office till Due Date. 4.3???? The Governing Board, on or after Due Date, shall be constituted in
accordance with the provisions of the Articles of Association of Bombay Stock
Exchange Limited 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. 4.4???? Notwithstanding anything contained in
clause 4.3, SEBI may nominate directors on the Governing Board as and when
deemed fit. 5. ????? Allotment
of Shares of Bombay Stock Exchange Limited 5.1???? Every Member or his nominee, as the case
may be, (other than the First Shareholders) 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 Bombay Stock Exchange Limited. 5.2???? 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 5.3???? Bombay Stock Exchange Limited 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 BSE shall be held in abeyance till
the suspension continues. 5.4???? The invitation to subscribe to, and the
offer, issue and allotment of equity shares of Bombay Stock Exchange Limited
pursuant to this clause shall not be considered as being an invitation, offer,
issue or allotment to the public. 6.?????? Listing
of Shares of Bombay Stock Exchange Limited. Bombay Stock Exchange Limited may at any time list
its securities on any recognized stock exchange. 7. ????? Transfer
to Bombay Stock Exchange Limited ????????? Pursuant to this Scheme, on and from the Due Date,: 7.1???? all assets, properties, undertakings,
segments (including the Derivatives Segment), 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 BSE), powers, authorities,
interests, privileges, exemptions, permissions, licenses, registrations and
recognitions (including, in particular, the recognition of BSE as a recognized
stock exchange under the Securities Contracts (Regulation) Act, 1956) of or
belonging to or in the possession or control of BSE or to which BSE may be
entitled, including those held by any trustees in trust for BSE or for the
Members or Limited Trading Members of BSE and Trading Members and/or Clearing
Members of the Derivatives Segment of BSE or for the objects and purposes of
BSE, and including those vested in or held by any committee of BSE, shall stand
transferred to and shall vest in and shall be in the possession or control of
and shall become the entitlement of Bombay Stock Exchange Limited, and Bombay
Stock Exchange Limited shall have the same right, title and interest therein or
thereto as BSE and such trustees or committees had immediately prior to the Due
Date. 7.2???? all obligations and liabilities of BSE
shall stand transferred to and shall become obligations and liabilities of
Bombay Stock Exchange Limited. 7.3???? Bombay Stock Exchange Limited shall, in
place and stead of BSE, become a party to, and shall be bound by and entitled
to, all contracts, agreements and other instruments to which BSE is a party or
by which BSE is bound or to which BSE is entitled, and the same may be enforced
and acted upon by or against Bombay Stock Exchange Limited accordingly. 7.4???? 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
BSE to or against the Members or Limited Trading Members of BSE or Trading
Members and/or Clearing Members of the Derivatives Segment of BSE, any
companies and others) of, by or against BSE shall not abate and shall be deemed
to be made, instituted or continued by or against Bombay Stock Exchange Limited
in place and stead of BSE. 7.5???? the employees of BSE shall become the
employees of Bombay Stock Exchange Limited in place and stead of BSE 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 BSE shall, unless and until such notices and
circulars are modified or rescinded by the Governing Board, continue to subsist
in relation to Bombay Stock Exchange Limited 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 BSE or general body of Members shall, unless and until
modified or rescinded by Governing Board or general body of Shareholders of
Bombay Stock Exchange Limited, as the case may be, continue to subsist in
relation to Bombay Stock Exchange Limited and shall be deemed to have been
passed and done by the Governing Board or general body of Shareholders of
Bombay Stock Exchange Limited, as the case may be. 8.1???? A Member or a Limited Trading Member of
BSE, who is registered as a stock broker on the day preceding the Due Date
shall become a Trading Member of the Cash Segment of Bombay Stock Exchange
Limited 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 of the
Cash Segment of Bombay Stock Exchange Limited 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???? A Trading Member and/or a Clearing Member
of the Derivatives Segment of BSE on the day preceding the Due Date shall
become a Trading Member and/or a Clearing Member of the Derivatives Segment of
Bombay Stock Exchange Limited on the Due date. 8.4???? After the Due Date, a person desirous of
becoming a Trading Member of any segment of Bombay Stock Exchange Limited 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 Bombay Stock
Exchange Limited. 8.5???? Bombay Stock Exchange Limited shall, for
the purpose of admitting any person as a Trading Member of a segment, 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; Provided further that different standards may be
followed for admission of Trading Members in different segments. 8.6???? A Trading Member may surrender his
membership of any segment to Bombay Stock Exchange Limited in the manner
specified in the Rules, Bye-laws and Regulations of Bombay Stock Exchange
Limited 8.7???? Trading Members of the Cash Segment of
Bombay Stock Exchange Limited and the Clearing Members of the Derivatives
Segment of Bombay Stock Exchange Limited shall clear and settle trades
respectively till the clearing and settlement function is transferred to a
recognized clearing corporation under clause 13.1 of this Scheme. 8.8???? Irrespective of the date or mode of acquisition of trading right, the
Trading Members in a segment of Bombay Stock Exchange Limited shall have
uniform rights and privileges. Provided that Bombay Stock Exchange Limited may,
with the prior approval of SEBI, grant additional privileges to those Trading
Members who were Members on the day preceding the Due Date. 8.9???? Trading Members of Bombay Stock Exchange
Limited 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 or Limited Trading Members of
BSE or Trading Members and or Clearing Member of Derivative Segment of BSE on
or before the Due Date. 8.10?? Trading Members of Bombay Stock Exchange
Limited shall be bound by all obligations and liabilities towards their clients
and constituents, SEBI, BSE 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 or Limited Trading Members of BSE or
Trading Members and or Clearing Members of Derivative Segment of BSE on or
before the Due Date 9.1???? A Trading Member may or may not be a
Shareholder. 9.2???? A Shareholder may or may not be a Trading Member. 10.1?? Bombay Stock Exchange Limited 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 Securities Contracts (Regulation) Act, 1956. 10.2?? On and from the Appointed Date, Bombay Stock
Exchange Limited 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 Bombay Stock Exchange Limited. On and from the Due Date: (i)????? Bombay Stock Exchange Limited shall be
entitled to, and shall, commence business and operations as the successor of
BSE; and (ii)???? BSE shall stand dissolved. 12. ??? Rules,
Bye-Laws and Regulations of Bombay Stock Exchange Limited 12.1?? The Rules, Bye-laws and Regulations, 1957 and
the Rules, Bye-laws and Regulations of the Derivatives Segment of BSE on the
day preceding the Due Date shall, unless contrary to or inconsistent with or
excluded by this Scheme, apply to Bombay Stock Exchange Limited on and from the
Due Date. 12.2?? Bombay Stock Exchange Limited shall
incorporate the provisions of this Scheme appropriately in the "Rules,
Bye-laws and Regulations of Bombay Stock Exchange Limited" on or before
the Due Date. 12.3?? The "Rules, Bye-laws and Regulations of
Bombay Stock Exchange Limited" 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.???? Clearing
Corporation of Bombay Stock Exchange Limited 13.1?? Bombay Stock Exchange Limited shall, within
one year of the Due Date, subject to the prior approval of SEBI, transfer the
duties and functions of the clearing house of Bombay Stock Exchange Limited to
a clearing corporation, being a company incorporated under the Companies Act,
1956 and recognized by SEBI as a clearing corporation under the Securities
Contracts (Regulation) Act, 1956. 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 Bombay Stock Exchange Limited shall be
carried out by the clearing and settlement mechanism as used by BSE or in such
other manner as the Governing Board may determine. 14.???? Utilisation
of Assets and Reserves 14.1?? Bombay Stock Exchange Limited shall not do
anything contrary to the provisions of section 4B (3) of the Securities
Contracts (Regulation) Act, 1956. 14.2?? Without prejudice to the generality of the
provisions in 14.1, Bombay Stock Exchange Limited shall not use the assets and
reserves (other than current assets) of BSE transferred to it under clause 7.1
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 the business operations of
the stock exchange. 15.???? Compliance
with the scheme 15.1?? BSE and Bombay Stock Exchange Limited, 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, BSE and
Bombay Stock Exchange Limited, as the case may be, shall continuously comply
with the provisions in Clauses 4.3, 8.4, 8.5, 8.6, 8.8, 10.2, 10.3, and 14. 15.3?? BSE and Bombay Stock Exchange Limited, 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.???? Power
to Relax Provisions of this Scheme If any difficulty arises in giving effect to the
provisions of this Scheme, SEBI may, at the written request of BSE or Bombay
Stock Exchange Limited, as the case may be, relax any of the provisions of this
Scheme.