Order in the matter of Exit of Hyderabad Securities and Enterprises Limited (Erstwhile Hyderabad Stock Exchange)
1.There are currently 25 Stock Exchanges across the country most of which are non-operational and only five have trading on their platform which includes NSE, BSE, MCX, USE and CSE.
2.SEBI vide Circular dated May 30, 2012 had issued the Guidelines for exit of stock exchanges. This contained details of the conditions for exit of de-recognised/non-operational stock exchanges interalia including treatment of assets of de-recognised exchanges and a facility of dissemination Board for companies listed exclusively on such exchanges, while taking care of the interest of Investors.
3. In the first such case of the erstwhile Hyderabad Stock Exchange (now Hyderabad Securities and Enterprises Limited) (hereinafter referred to as ˜HSEL™), Whole Time Member, SEBI, has passed an Order on January 25, 2013 providing the exit to HSEL.
4. In compliance with the Circular regarding the Exit of de-recognised/non-operational Stock Exchanges:
(i)HSEL has in a timely manner transferred an amount of Rs. 3,09,97,440 available in its ˜Investor Protection Fund™ and ˜Investor Services Fund™ and ˜1% security deposit™ amount of Rs. 82,76,166 available with it to the SEBI IPEF.
(ii) HSEL has paid the necessary dues outstanding to SEBI including 10% of the listing fee and the annual regulatory fee
(iii) HSEL has paid the outstanding registration fees of brokers/trading members as specified in the SEBI (Stock Brokers and Sub Brokers) Regulations, 1992 till the date of such de-recognition.
(iv) HSEL has contributed an amount to Rs. 1,00,00,000, towards SEBI IPEF.
(v) HSEL has shifted the companies listed exclusively on it to the dissemination Board of BSE Ltd
(vi) HSEL has set aside funds in order to provide for an ongoing Arbitration case.
5. Pursuant to the said Order, Hyderabad Securities & Enterprises Limited or its subsidiaries (if any) may continue to function as any other corporate entity or any other normal broking entity, as the case may be, managed by its own board subject to compliance of applicable laws/regulations etc. HSEL is permitted to distribute its assets subject to certain conditions as laid down in the Exit Order as well as the other guidelines that may be issued by Government or any other statutory body from time to time. HSEL has submitted an undertaking to take care of the known future liabilities and that the necessary statutory dues like Income Tax would be paid by HSEL before the disposal of any Fixed Asset.
6. Further, HSEL shall not use the expression Stock Exchange or any variant in its name or in its subsidiary™s name so as to avoid any representation of present or past affiliation with the Stock Exchange, in all media including the Web.
7. Further that the Income Tax Authorities and the State Government of Andhra Pradesh are being intimated about the exit of HSEL, for appropriate action at their end.
The full text of the order is available for download.