Section 4: Submission of information by the stock exchange

4. Submission of information by the stock exchange. —(1) Within forty-five days of the commencement of this Act, each stock exchange shall, submit to the Commission the following, namely:— (a) a valuation of the stock exchange approved by the committee as at any date that may be specified by the Commission, based on the discounted cash flow or net asset value of the stock exchange, or any other internationally accepted method of valuation undertaken by a renowned international investment bank approved by the Commission: Provided that the Commission may, on a reasoned request made by the stock exchange, extend the time for the submission of the valuation of the stock exchange till 120 days from the commencement of this Act; (b) a re-valuation of the assets and liabilities of the stock exchange as at 30th June, 2008, or as at any other date as may be specified by the Commission, undertaken by a firm of Chartered Accountants approved by the Commission in accordance with the prescribed criteria based on which valuation, the number of shares of ten rupees par value proposed to be issued will be determined; (c) the proposed authorized and paid-up capital of the stock exchange with the number of shares to be issued; (d) the names of members of the stock exchange proposed to be the initial shareholders of the stock exchange and the number and value of shares to be allotted to each such member: Provided that the shares allotted in pursuance of this sub -section shall be allotted for consideration other than cash. (e) the names of members of the stock exchange, nominated to act as the first directors of the stock exchange until such time as elections are held in accordance with this Act: Provided that the stock exchange shall nominate only four members to act as the first directors; (f) the proposed plan for the segregation of the commercial and regulatory functions of the stock exchange; (g) the draft memorandum and articles of association of the stock exchange; (h) a detailed five year development plan for the stock exchange together with the capital expenditure estimate and the sources of finance: Provided that the items listed at clauses (b) to (h) of sub-section (1) shall be submitted to the Commission after being duly approved by the Board of Directors of the stock exchange. (2) Within thirty days of receipt of the information submitted by a stock exchange under sub- section (1), the Commission shall, subject to the provisions of sub-section (4), approve and communicate to the stock exchange the following namely:— (a) the revaluation of the assets and liabilities of the stock exchange; (b) the authorized and the paid up capital of the stock exchange; (c) the names of members of the stock exchange proposed to be the initial shareholders of the stock exchange; (d) the number of shares that may be allotted to each member of the stock exchange for consideration other than cash; (e) the names of members nominated to act as first directors of the stock exchange; (f) the plan for the segregation of the commercial and regulatory functions of the stock exchange; (g) the memorandum and articles of association of the stock exchange; and (h) the approved development plan. (3) At the time of communicating the items listed in sub-section (2), the Commission shall also communicate to the stock exchange the names of six persons to be nominated by the Commission to act as the first directors of the stock exchange with a direction to elect one of these persons as the Chairman of the Board of Directors of the stock exchange. (4) The Commission may, if it deems necessary in the interest of the capital markets, make appropriate amendments in any of the matters mentioned in sub-section (2), other than the re-valuation carried out by the firm of Chartered Accountants, before granting its approval: Provided that before making any substantive amendments, the Commission shall inform the stock exchange of such amendments, and if so required by the stock exchange in writing, provide an opportunity of hearing to the stock exchange: Provided further that any decision of the Commission under this sub-section (4) shall be final and binding. (5) The valuation of the stock exchange as mentioned in clause (a) of sub-section (1), shall be provided to the Commission in a sealed envelop and the Commission shall keep the envelop sealed till the sale of shares to a strategic investor, in which case it shall return the sealed envelop to the stock exchange. In case there is no sale of shares to a strategic investor in the manner provided in this Act, the Commission shall open the envelop in accordance with provisions of section 12. (6) If a stock exchange fails to comply with any or all of the requirements of sub-section (1) within the stipulated time or any extension thereof, the Commission shall undertake or decide as the case may be, the matters listed in sub-section (1) and communicate the same to the stock exchange for further compliance. Any action taken by the Commission in pursuance of this sub -section shall be final and binding on the stock exchange and its members: Provided that if the Commission engages a renowned international investment bank for the purposes of clause (a) of sub-section (1) or a firm of Chartered Accountants for the purposes of clause (b) of sub-section (1), the cost of such valuation, including all ancillary costs, shall be borne by the stock exchange being valued.

Effective date: 2012-01-01

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