UP bourse completes its demutualisation

Kanpur-based Uttar Pradesh Stock Exchange (UPSE) has completed its demutualisation process and submitted all the documents to the regulator, Sebi, for formal permission, KD Gupta, administrator, told Business Standard.

The demutualisation of the bourse, which at a time seemed unlikely to happen, was essential for preventing derecognition by Sebi.

However, the stock exchange community was able to formulate a scheme, through which the brokers renounced their rights issue allotment and these were sold to outside investors. The brokers were able to persuade their clients to buy the shares of the exchange.

They were told at the outset, says Gupta, that they will not be able to redeem it very quickly, as the scrip will not be listed soon and this will take some time.

Gupta said the shares of the bourse had been allotted to 49 persons. A total of 552 shares had been allotted of the paid up capital of 1,000 shares of the face value of Rs 2,000. Thus, the bourse had been able to cross the demutualisation limit of 51 per cent set by Sebi.

Gupta said that in answer to stock exchange query, 38 of 257 shareholders who had been members from earlier period had indicated that they were not associated with trading or with traders, thus qualifying for being treated as public shareholders, which is another 3.8 per cent. Thus, the total clear non-trading membership of the exchange had gone up to about 59 per cent.

Presently, there are 191 trading members, who also have shares from the earlier period. This number constitutes 19.1 per cent of the stock exchange's paid-up capital as against Sebi rule of 49 per cent. Thus, the percentage of shareholding is likely to increase.

The stock exchange's paid-up capital stands at Rs 20 lakhs, consisting of 1000 shares of Rs 2,000 face value and the share premium account is of Rs 2,00,50,000. He said the share cannot be listed as it is below the minimum requirement of Rs 3 crore paid-up capital.

"Once we are through with it, we have to improve our stock related business. Central Depository Securities Ltd (CDSL) had vetted our application. Once our balance sheet for 2006-07 fiscal is audited, we would be granted the mandate to run a depository," Gupta said.

Besides, the UPSE owns 10,000 shares of the BSE. Once the latter scrip is listed they propose to well a portion of it so that they could mobilise the minimum paid-up capital required for NSE listing.