The Calcutta Stock Exchange Association Ltd
7, Lyons Range, Kolkata - 700 001

The Securities and Exchange Board of India has approved the Demutualisation Scheme of The Calcutta Stock Exchange Association Ltd vide its Order No. SEBI/MRD/48106 /2005 dated August 29, 2005 and the same has been notified in the Official Gazette [S.O. no 1199(E)] on the same date. The approved Scheme is given below:

The Calcutta Stock Exchange Association Ltd. (Demutualisation) Scheme, 2005
The Securities and Exchange Board of India has approved the Demutualisation Scheme of The Calcutta Stock Exchange Association Ltd vide its Order No. SEBI/MRD/48106 /2005 dated August 29, 2005 and the same has been notified in the Official Gazette [S.O. no 1199(E)] on the same date. The approved Scheme is given below:

The Calcutta Stock Exchange Association Ltd. (Demutualisation) Scheme, 2005

1. Title and Commencement

1.2      The Calcutta Stock Exchange Association Ltd. (hereinafter referred to as �CSEA�) shall be demutualised in accordance with this Scheme on and from the Appointed Date as may be notified by the Securities and Exchange Board of India (hereinafter referred to as �SEBI�) in respect of CSEA under Section 4A of the SCRA:

Provided that the activities specified in the respective clauses of this Scheme shall be implemented as per the time schedule specified in those clauses. 

2. Definitions
In this Scheme, unless the context otherwise requires, -

2.1      "Due Date" means the date, as may be determined by the Governing Board or the Administrator, as the case may be, which shall not be later than 3 months from the date of publication of the Order under sub-section (7) of Section 4B of the SCRA.

2.2      "Governing Board" means the Board of Directors of CSEA.

2.3      "Member" means a person who is a member of CSEA on the day preceding the Due Date as per the Register of Members maintained by it.

2.4      "Shareholder" means a person who holds any equity share(s) of CSEA on or after the Due Date.

2.5      "The Calcutta Stock Exchange Association Limited" (CSEA) means the Company limited by shares, registered under the Companies Act, 1913 vide registration no. 4707 of 1923-24, having its Registered Office at 7, Lyons Range, Kolkata � 700001, which has been recognized as a stock exchange by the Central Government under the SCRA, on a permanent basis.

2.6      "Trading Member" means a stock broker of CSEA and registered with SEBI as such under the SEBI (Stock Brokers and Sub-Brokers) Regulations, 1992.

2.7      Words and expressions used and not defined in this Scheme but defined in the Securities and Exchange Board of India Act, 1992, the Depositories Act, 1996, the SCRA, the Companies Act, 1956, the rules and regulations made under these Acts, the Memorandum and Articles of Association, Rules, Bye-Laws and Regulations of CSEA, shall have the same meaning respectively assigned to them in the above mentioned Acts, memorandum and articles, rules, bye-laws and regulations.

3. Memorandum and Articles of Association, etc. of CSEA
3.1  CSEA shall incorporate the provisions of this Scheme appropriately in its memorandum and articles of association and the rules, bye-laws and regulations on or before the Due Date.

3.2  The memorandum and articles of association and the rules, bye-laws and regulations of CSEA may be amended after the Due Date in accordance with the applicable laws, provided that no such amendment is inconsistent with any provision of this Scheme. 

4.      Governing Board of CSEA
4.1  On and from the Due Date or on expiry of the period of supersession under Section 11 of SCRA, whichever is later, the Governing Board shall be constituted in accordance with the provisions of the Articles of Association of CSEA in force from time to time, provided that-

(i)     the representation of Trading Members does not exceed one-fourth of the total strength of the Governing Board, and the remaining directors are appointed in the manner as may be specified by SEBI from time to time, and

(ii)    the Chief Executive, by whatever name called, is an ex-officio director.

4.2  Notwithstanding anything contained in clause 4.1, SEBI may nominate directors on the Governing Board as and when deemed fit. 

5.      Listing of Shares of CSEA
CSEA may at any time list its securities on any recognized stock exchange. 

6.      Demutualisation 
6.1  A Trading Member may or may not be a Shareholder.

6.2  A Shareholder may or may not be a Trading Member.

7.      Trading Rights
7.1  A Member, who is registered as a stock broker on the day preceding the Due Date, shall become a Trading Member on the Due Date.

7.2  A Member, who is not registered as a stock broker on the day preceding the Due Date, shall become a Trading Member on being registered as a stock broker under SEBI (Stock Brokers and Sub-Brokers) Regulations, 1992 within 3 months from the Due Date.

7.3     After the Due Date, a person desirous of becoming a Trading Member shall be admitted if he complies with the requirements and brings in fees and deposits as specified in the rules, bye-laws and regulations of CSEA.

7.4     CSEA shall, for the purpose of admitting any person as a Trading Member, follow uniform standards in terms of capital adequacy, deposits, fees, etc. irrespective of mode of acquisition of trading right by that person:

            Provided that different standards may be followed for admission of a person as a Trading Member who has acquired trading right by way of transmission.

7.5     A Trading Member may surrender his membership to CSEA in the manner specified in the rules, bye-laws and regulation of CSEA.

7.6     Irrespective of the date or mode of acquisition of trading right, the Trading Members shall have uniform rights and privileges.

7.7     Trading Members on the Due Date shall continue to have the same rights and privileges in respect of their clients and constituents and other members arising out of or under any act, omission or contract or law, notification, order, direction, etc. as had accrued to them while being Members on or before the Due Date.

7.8     Trading Members shall be bound by all obligations and liabilities towards their clients and constituents, SEBI, CSEA and other authorities or other persons arising out of or under any act, omission or contract or law, notification, order, direction, etc. while being Members on or before the Due Date. 

8.      Shareholding Rights
8.1 A Member shall become a shareholder on the Due Date.

8.2 CSEA shall ensure that at least 51% of its equity shares are held by public other than shareholders having trading rights in the manner and within the period prescribed in sub-section (8) of Section 4B of the SCRA.

8.3 On and from the Appointed Date, CSEA shall ensure that public other than shareholders having trading rights continuously holds at least 51% of equity shares.

8.4 On and from the Due Date, no Shareholder, who is a Trading Member, shall have voting rights (taken together with voting rights held by him and by persons acting in concert with him) exceeding 5% of the voting rights in CSEA. 

9. Transfer of Clearing and Settlement functions
9.1 CSEA shall, within two years of the Due Date, subject to the prior approval of SEBI, transfer the duties and functions of the clearing house of the Exchange to a Clearing Corporation, recognized under the SCRA.

9.2 Until the duties and functions of the clearing house are transferred as provided in clause 9.1, the clearing and settlement functions in relation to trading on CSEA, shall be carried out by the clearing and settlement mechanism as used by CSEA at present or in such other manner as the Governing Board or the Administrator, as the case may be, may determine. 

10.    Utilisation of Assets and Reserves
10.1 CSEA shall not do anything contrary to the provisions of Section 4B (3) of the SCRA.

10.2 Without prejudice to the generality of the provisions of clause 10.1, CSEA shall not use its assets and reserves as on the date of publication of this Scheme or the proceeds from disposal of such assets or the proceeds from disposal of successive species of assets acquired from the proceeds of disposal of such assets for any purpose other than discharging the current liabilities outstanding as on the date of publication of this Scheme or for the business operations of stock exchange.  

11. Compliance with this Scheme
11.1 CSEA shall ensure compliance with the provisions of this Scheme at all times and shall not do anything contrary to the provisions of this Scheme.

11.2 CSEA shall report compliance with the provisions of this Scheme in such manner as may be required by SEBI from time to time. 

12.    Removal of Difficulties
If any difficulty arises in giving effect to the provisions of this Scheme, SEBI may, at the written request of CSEA, relax any of the provisions of this Scheme.