Section 12: Divestment and issue of further shares

12. Divestment and issue of further shares.—(1) The Commission may at any time not later than two years from the date of demutualization direct the stock exchange and its shareholders to do one or more of the following, namely:- (a) to enter into an agreement with a strategic investor, within one year of such direction, for the sale of not more than forty percent of its total issued share capital out of the shares lying in the blocked account; (b) to sell to the general public through an offer for sale, not less than twenty percent of its total issued share capital out of the shares lying in the blocked account within one hundred and eighty days of the direction in accordance with applicable laws; (c) to enter into agreements with and to sell to local financial institutions any shares remaining in the blocked account after sale of shares to the strategic investor and the general public, within one year of the direction: Provided that the Commission may extend the period for compliance upon an application by the stock exchange setting out the reasons for not being able to comply with the said order within the specified time. (2) A stock exchange may, by special resolution issue further shares carrying extra voting rights to a strategic investor with the prior written approval of the Commission. (3) In case if no agreement for the sale of shares of the stock exchange is reached with any strategic investor within one year of the direction given by the Commission or within such time as may be extended by the Commission, the Commission may open the sealed envelop containing the valuation of the shares. (4) Upon opening the sealed envelop, the Commission may take such steps or give such directions as may be necessary for achieving the sale of shares, including but not limited to— (a) ordering the sale of shares to a strategic investor who had earlier made an offer to purchase the shares, if the price offered by such strategic investor was equal to or more than the valuation of the shares contained in the sealed envelop; or (b) ordering a fresh auction of the shares and selling to the highest bidding strategic investor or financial institutions such number of shares and in such manner as the Commission may specify; or (c) ordering a revaluation of the stock exchange at the cost of the stock exchange and in such manner as the Commission may specify. (5) Notwithstanding anything contained in sub-sections (1) to (4), if a stock exchange fails to comply with any or all of the directions given to the stock exchange under sub-section (1), the Commission may determine and conclude the matters listed in sub-section (1) in such manner as may be prescribed and any such determination by the Commission shall be final and binding on the stock exchange, its shareholders including the initial shareholders and the CDC. (6) Refusal by any initial shareholder to accept an agreement duly entered in accordance with the provisions of this section 12, or failure by any person to comply with any directions given by the Commission, or the willful failure of the committee to sell the shares if the offer price received for such shares is equal to or more than the approved valuation, shall be an offence.

Effective date: 2012-01-01

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