Section 5: Procedure upon receiving approval or determination

5. Procedure upon receiving approval or determination.—(1) Within thirty days of being granted approval under sub-section (2) of section 4 or a determination under sub-section (6) of section 4, the stock exchange shall— (a) adopt in a meeting of its members by a special resolution the approved memorandum and articles of association; (b) allot shares to the members approved to be the initial shareholders in the approved numbers: Provided that all shares will be allotted in a dematerialized format and shall not, at any time or for any reason, be convertible into physical format; (c) deposit in a blocked account sixty per cent of shares allotted to each initial shareholder and hold these in the blocked account until such time as these shares are disposed of in accordance with section 12; (d) issue a certificate to each initial shareholder certifying the number of his shares held in the blocked account; and (e) issue a TRE certificate to each initial shareholder. (2) Willful failure of a stock exchange to comply with any of the requirements of this section shall be an offence under this Act. (3) Within seven days of the adoption of the memorandum and articles of association as aforesaid, the stock exchange shall deliver to the Registrar,— (a) a certified copy of the special resolution by which the memorandum and articles of association have been adopted; (b) a certificate from the auditors of the stock exchange certifying that all shares have been allotted to the initial shareholders in a dematerialized format; and (c) a certificate from CDC that sixty per cent of the shares allotted to each initial shareholder have been deposited in a blocked account in accordance with clause (c) of sub-section (1) of section 5.

Effective date: 2012-01-01

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