OTC Exchange of India Amendments to the Bye-Laws of OTC EXCHAHQB OF MEDIA.

REGD, NO, D. L.-33004/99 The Gazette of India

EXTRAORDlNARY

PART II-Section 3-Sub-section (ii)

PUBLISHED BY AUTHORITY

No. 380] NEW DELHI, FRIDAY, APRIL 19, 2002/CHAITRA 29,1924

1313 GI/2002

(1)2 THE GAZETTE OF INDIA: EXTRAORDINARY [PART II—SEC. 3(ii)l 34 ; THE GAZbTJ V, OF INDIA: EyTRAORDINARY [PART II—SEC, 3(ii)| J

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OTC EXCHANGE OF INDIA

NOTIFICATION

Mumbai. the 28th March, 2002

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OTC EXCHAHQB OF MEDIA.

S.O. 452(E)..—As approved by the Board of OTCEI at its meeting held on March 28,2002 and by SEBI vide its letter No. LKS/229/2001 datedMay 18,2001.

ntaBpTBDAmgWCgAPTBRXVA AFTBR CHAPTER XV Og THE BYE-LAWS:

XV-A CODE OF ETHICS FOR DIRECTORS AND FUHCFIOHAKIES OF EXCHANOES

Obtecthma

The code of ethics for directors and functionaries of the exchange seeks to establish a minimum level of buamess/profe"sianal ethics to be followed by these luactioiiiaries, towajrets- estabiisbktg a fair and transparent marketplace. The code of ethics is based on the following fundamental principles:

• Fairness and transparency in dealing with matters relating to the exchange and the investors

• Compliance with, al) laws/rules/regulations laid down by regulatory agencies / exchange

• Exercising due diligence in the performance of dvtics • Avoidance of conflict of ^interest between self interests of directors/ functionaries and interests of exchange and investors

-BtftnlUons

1. Functionaries: Functionaries of the exchange to whom this code shall be applicable shall be decided by the exdiange but shall include all officials of the rank of General Manager and above.

7 2. Family: Family members will include dependent spouse, dependent children, dependent parents.

3. Securities: Securities far the purpose of this code shall not include mutual fund units and govt. securities.

Ethics Committee

For overseeing mTplemcntation of this cade, an Ethics Committee shall be constituted by every exchange under the respective Governing Board. Not more than 40% of the members of this committee shall be elected directors/exchange members.

1. General Standards

i. Directors and functionaries shall endeavour to promote greater awareness and understanding of ethical responsibilities.

ii. Directors and functionaries, in the conduct of their business shall observe high standards of commercial honour and just and equitable principles of trade.

iiL The conduct of Directors and functionaries in business life should be exemplary which will set a standard for other members of the exchange to follow.

iv, Directors and functionaries shall not use their position to do or get favours from the executive or administrative staff of the exchange, suppliers of the Exchange or any listed company at the Exchange.

v. Directors and functionaries shall not commit any act, which will put the reputation of the Exchange in jeopardy.

vi. Directors,, Committee Members and functionaries of the Exchange should comply with all rules and regulations applicable to the securities market-

& Prohibition on deettbiffs in securities in proprietors account by

elected qfftcm bearers of the exchange (President/Vice

President/Treasurer):

Elected office bearers (President/Vice President/Treasurer) of the exchange shall refrain from proprietary trades in securities, directly or indirectly, during the period of holding office.

3. Disclosure of dealings in securities by functionaries of the

exchange:

i. Functionaries of the exchange shall disclose on a periodic basis as determined by the exchange (which could be monthly), all their dealings in securities, directly or indirectly, to the Governing Board/Ethics Committee/designated compliance officer.

ii. The dealings in securities shall also be subject to trading restrictions for securities about which functionaries in the exchange may have non- public price sensitive information. Requirement laid down under SEBI Insider Trading Regulations may be referred in this regard.

iii. All transactions must be of an investment nature and not speculative in nature. Towards this end, all securities purchased must be held for a minimum period of 60 days before they are sold. However, in specific/exceptional circumstances, sale can be effected anytime by obtaining pre-clearance from the compliance officer or any other designated authority who will be empowered to waive this condition after recording in writing his satisfaction in this regard.

4. Disclosure of dealings in securities by directors of the exchange:

i. Directors (other than elected office bearers as per clause 2) of the exchange shall disclose on a periodic basis, as determined by the exchange (which could be monthly}, 4:heir proprietary trading, directly or indirectly, to the Ethics Committee.

ii. All Directors shall also disclose on a periodic basis as above, the trading conducted by firms/ corporate entities in which they hold 20% or more beneficial, interest or hold a controlling interest, to the- Ethics Committee.

Directors who are Govt, of India nominees or nominees of Govt, of India statutory bodies or Financial Institutions and are governed by their own codes shall be exempt from this requirement.

5. Avoidance of Conflict of Interest

i. No director of the governing board or member of any committee of the exchange shall participate in any decision making/adjudication in respect of any person/matter in which he ia in any way, directly or indirectly, concerned or interested.

9 ii. Whether there is any conflict of interest or not in a matter should be decided by the governing board.

6. Disclosures of beneficial interest

All Directors and functionaries shall disclose to the Governing Board, upon assuming office and during their tenure in office, whenever the following arises,

i. Any fiduciary relationship of self and family members and directorship/partnership of self and family members in any broking outfit,

ii. Shareholding, in cases where the shareholding of the director, directly or through his family exceeds 5% in any listed company on the Exchange or in other entities related to the capital markets,

iii. Any other business interests.

7. Role of the President/Chairman and directors in the dayto-day

functioning of the Exchange

i. The President and directors shall not interfere in the day-to-day

functioning of the exchange and shall limit their role to decision making on policy issues and to issues as the Governing Board may decide.

ii. The President and directors shall abstain from influencing the employees of the Exchange in conducting their day to-day activities.

iii. President and directors shall not be directly involved in the fanction of appointment and promotion of employees unless specifically so decided by the Governing Board.

8. Access to Information

i. Directors shall call for information only as part of specific committees or as may be authorised by the Governing Board.

ii. There shall be prescribed channels through which information shall move and further there shall be audit trail of the same. Any retrieval of confidential documents/information shall be properly recorded.

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iii. All such information, especially which is non-public and price sensitive, shall be kept confidential and not be used for any personal consideration/ gain.

iv. Any information relating to the business/operations of the exchange, which may come to the knowledge of directors/functionaries during performance of their duties shall be held in strict confidence, shall not be divulged to any third party and shall not be used in any manner except for the performance of their duties.

9. Misuse of position

i. Directors/committee members shall not use their position to obtain business or arty pecuniary benefit (as intermediaries like brokers or in any other capacity like professional or consultancies) in the organization for themselves or family members.

10. Ethics Committee to lag down procedures and designate

compliance officer

I. The ethics committee shall lay down procedures for the implementation of the code and prescribe reporting formats for the disclosures required under the code.

11. The ethics committee may designate a senior officer of the exchange as compliance officer for executing the requirements laid down by it.

• While the objective of this code is to enhance the level of market integrity and investor confidence, it is emphasized that a written code of ethics may not completely guarantee adherence to high ethical standards. This can be accomplished only if directors and functionaries of the exchange commit themselves to the task of enhancing the fairness and integrity of the system in letter and spirit.

[No. 0757/02/L&S/032]

For OTC Exchange of India

PRAVEENMOHNOT, Managing Director and CEO Printed by tho Manager, Govt, of [ndin Press. Ring Road, Mayapuri, New Ddbi-110064 uitd Publiihod by the Controller of Publications, Delhi-110034.