Year : 2004
[Act, No. 1 of 2005]
[6th January, 2005]
A Act further to amend the Securities Contracts (Regulation) Act, 1956 and the Depositories Act 1996.
Be it enacted by Parliament in the Fifty Fifth year of Republic of India as follows:-
Section -1 Short title and commencement
(1) This Act may be called the Securities Laws (Amendment) Act, 2004.
(2) It shall come be deemed to have come into force on the 12th day of October, 2004.
Section -2 Amendment of Section 2
In Section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) (hereafter in this Chapter referred to as the principal Act),-
(i) clause(aa) shall be re-lettered as clause (ac) thereof and before the clause (ac) as so re-lettered, the following clauses shall be inserted, namely:-
(aa) "Corporatisation" means the succession of a recognised stock exchange, being a body of individuals or a society registered under the Societies Registration Act, 1860 (21 of 1860), by another stock exchange, being a company incorporated for the purpose of assisting, regulating or controlling the business of buying, selling or dealing in securities carried on by such individuals or society;
(ab) "Demutualisation" means the segregation of ownership and management from the trading rights of the members of a recognised stock exchange in accordance with a scheme approved by the Securities and Exchange Board of India;
(ii) Clause (ga) shall be re-lettered as clause (gb) thereof and before the clause (gb) as so re-lettered, the following clause shall be inserted, namely:-
(ga) "Scheme" means a scheme for corporatisation or demutualisation of a recognised stock exchange which may provide for-
(i) The issue of shares for a lawful consideration and provision of trading rights in lieu of membership cards of members of a recognised stock exchange;
(ii) The restrictions on voting rights;
(iii) The transfer of property, business, assets, rights, liabilities, recognitions, contracts of the recognised stock exchange, legal proceedings by, or against, the recognised stock exchange, whether in the name of the recognised stock exchange or any trustee or otherwise and any permission given to, or by, the recognised stock exchange;
(iv) The transfer of employees of a recognised stock exchange to another recognised stock exchange;
(v) Any other matter required for the purpose of, or in connection with, the corporatisation or demutualisation, as the case may be, of the recognised stock exchange;
(iii) In clause (h), after sub-clause (ic), the following sub-clause shall be inserted, namely:-
"(id) Units or any other such instrument issued to the investors under any mutual fund scheme;";
(iv) For clause (j), the following clause shall be substituted, namely:-
'(j) "Stock exchange" means -
(a) Any body of individuals, whether incorporated or not, constituted before corporatisation and demutualisation under Sections 4A and 4B, or
(b) A body corporate incorporated under the Companies Act, 1956 (1 of 1956) whether under a scheme of corporatisation and demutualisation or otherwise,for the purpose of assisting, regulating or controlling the business of buying, selling or dealing in securities;.
Section -3 Insertion of new Sections 4A and 4B
After Section 4 of the principal Act, the following Sections shall be inserted, namely:-
4A. Corporatisation and demutualisation of stock exchanges.â€”
On and from the appointed date, all recognised stock exchanges (if not corporatised and demutualised before the appointed date) shall be corporatised and demutualised in accordance with the provisions contained in Section 4B:Provided
that the Securities and Exchange Board of India may, if it is satisfied that any recognised stock exchange was prevented by sufficient cause from being corporatised and demutualised on or after the appointed date, specify another appointed date in respect of that recognised stock exchange and such recognised stock exchange may continue as such before such appointed date.
For the purposes of this Section, "appointed date" means the date which the Securities and Exchange Board of India may, by notification in the Official Gazette, appoint and different appointed dates may be appointed for different recognised stock exchanges:
4B. Procedure for corporatisation and demutualisation.-
(1) All recognised stock exchanges referred to in Section 4A shall, within such time as may be specified by the Securities and Exchange Board of India, submit a scheme for corporatisation and demutualisation for its approval:Provided
that the Securities and Exchange Board of India, may, by notification in the Official Gazette, specify name of the recognised stock exchange, which had already been corporatised and demutualised, and such stock exchange shall not be required to submit the scheme under this Section.
(2) On receipt of the scheme referred to in sub-Section (1), the Securities and Exchange Board of India may, after making such enquiry as may be necessary in this behalf and obtaining such further information, if any, as it may require and if it is satisfied that it would be in the interest of the trade and also in the public interest, approve the scheme with or without modification.
(3) No scheme under sub-Section (2) shall be approved by the Securities and Exchange Board of India if the issue of shares for a lawful consideration or provision of trading rights in lieu of membership card of the members of a recognised stock exchange or payment of dividends to members have been proposed out of any reserves or assets of that stock exchange.
(4) Where the scheme is approved under sub-Section (2), the scheme so approved shall be published immediately by READ MORE