Corporatisation Note Foxes Brokers

Over 200 stock brokers who converted their individual membership into corporate entities before December 31, 1997, will have to pay again registration fees as per the Securities and Exchange Board of India (Sebi) directive.

According to the newly formed Securities Industry Association (SIA), Sebi has issued a directive that stock brokers who have converted their membership into a corporate entity before the gazette notification date of January 21, 1998, are not eligible for concession in turnover fees. They would have to pay the fee for the next five years from the date of corporatisation.

According to a Sebi resolution on August 12, 1997, brokers were offered concession in turnover fees who had converted into corporate entities before December 31, 1997. However, Sebi recently has told brokers that conversions before the gazette notification would not attract concession and brokers would have to pay the fees again for the next five years.

The Union finance minister in the Budget speech for 1997-98 had introduced a provision whereby those stock brokers who converted their individual membership into corporate member on or before December 31, 1997, were exempted from capital gains on the notional capital gains that may have arisen to the broker on such conversion.

Members of the newly formed SIA point out that without both the exemption in place, broker would have converted into corporate entity. Further, all the conditions set by the Sebi board to become eligible to get this exemptions were also complied with by all these stock brokers.

Brokers said: