SECURITIES AND EXCHANGE BOARD OF INDIA

NOTIFICATION

Mumbai, the 24th September, 2002

S.O. iO3O(E).— Whereas the Hon'ble Finance Minister had announced in the

Parliament on March 13, 2001, that "corporatisation of stock exchanges by which

ownership, management, and trading membership would be segregated from

each other. Administrative steps will be taken and legislative changes, if required,

will be proposed accordingly."

In accordance with the above, policy

announcement, The Securities and Exchange Board of India (hereinafter referred

to as "SEBI") had discussed the issue of demutualization with the stock

exchanges from time to time and

Whereas SEBI Board in its meeting held on December 28, 2001, discussed the

issue of demutualization of the stock exchanges and decided that henceforth no

THH GAZETTE OF INDIA: EXTRAORDINARY

[PARI II—Stc. 3(ii)l

broker member shall be an office bearer of an exchange that is hold the position

of the President, Vice-President, Treasurer etc., and the other administrative and

legal modalities for corporatisation and demutualization of exchanges of the

stock exchanges are being worked out; and

Whereas subsequently, SEBI directed all the exchanges including The Calcutta

Stock Exchange Association Ltd (hereinafter referred to as "CSE") vide circular

no. SMD/POLICY/CIR-2/2002 dated January 10, 2002, to implement the SEBI

Board decision by suitably amending their Rules, Articles uf Association etc.,

within two months from the date of the said Order; and

Whereas SEBI advised CSE vide letter no. SMD/CSE/ADMN/4536/02 dated

March 19, 2002 to confirm whether they had complied with the SEBI directive of

January 10, 2002, issued vide SEBI Circular no. 2, whereby no broker member

was allowed to hold office as President, Vice-President within a period of two

months from the date of the directive and CSE was also advised to confirm

whether they had suitably amended the Rules, Articles of Association etc., to

give effect to the above decision taken by the SEBI Board and the policy decision

of government in this regard; and

Whereas in response to the above mentioned letter and circular dated January

10, 2002, CSE vide its letter dated 19.3.2002 informed that the said directive

shall be incorporated after implementation of model rules of conduct and that

appropriate changes will be made in the memorandum and articles of association

of the exchange after its approval by the commlttee/SEBI/general body of

shareholders, that the process has been initiated and

Whereas most of the stock exchanges have amended their rules/articles of

association to give effect to the order of 10.1.2002, and there is failure on the

part of CSE to amend the articles of association in the light of the above, SEBI is

of the opinion that in the interests of the investors and the capital markets, as

also in public interest, it is necessary and expedient to amend the Articles of

Association, in the manner indicated in this Order, inter-alia for the following

reasons risrnsfy;

(i)

To expedite the corporatisation of stock exchanges by which ownership,

management, and trading membership would be segregated from each

other to improve institutional mechanism and trading practices in the stock

markets,

(ii)

Moreover, the Board finds it desirable to maintain uniformity in the Rules,

Regulations and Bye-laws regarding composition of the Governing Board

of various stock exchanges in the country.

Now, therefore in exercise of the powers conferred by Sub-section 2 of Section 8

of the Securities Contracts (Regulation) Act, 1956 read with the powers

delegated to the Board by the SEBI under its notification no. S.O / 573(E) dated

July 3, 1992 issued under Section 29A of the said Act, Securities and Exchange

Board of India makes the following amendments to the Articles of Association of

CSE namely: -

1. In clause (i) Article 82E,

the word "elected" appearing after the words "amongst the" and before

the word "members" shall be deleted.

the words "under clause (a) of article 81" appearing after the word

"committee" and before the words "within ten days" shall be deleted.

in the proviso, the word "elected" appearing after the word "no" and

before the word "member" shall be deleted.

afterihe existing proviso, the following proviso shall be added:

"Provided further that no broker member of the exchange shall bi-

an office bearer i.e. President, Vice President or Treasurer of the

exchange."

[F No. SEBI/LE/18591/02]

G. N. BAJPA1, Chairman

TWed W rtie Manager, Govl of India PrtBs, Ring Road, Mayapun, New Uelhi-110064

and Published by the Controller ol Publit:itiuns, Delhi-1 1003<l