Sebi, Bse In Talks Over Fees Waiver

Move to speed up process of brokers corporatisation

The Securities and Exchange Board of India (Sebi) and the Bombay Stock Exchange (BSE) have begun talks on the waiver of the Sebi registration fees for corporatisation.

The move has been initiated to provide a big push to hasten the pace of corporatisation of brokers after the finance ministry's one-time exemption from the capital gains tax to stockbroking firms turning corporate entities. The deadline for availing of the one-time tax exemption expires on December 31, 1997.

"We have had preliminary discussions with Sebi on the waiver of registration fees," BSE president M G Damani told Business Standard. BSE has also decided that a company, eligible to be a member under rule 19(A)(b) of the exchange, nominated by an existing individual member of BSE and admitted as a corporate me-mber, where the outgoing individual member himself holds, together with his family members and current partner over 51 per cent of the share capital, would not be required to pay any admission fees to the exchange.

 

The discussions with Sebi on the registration fee waiver has been initiated in the same spirit, Damani said. Finance minister P Chidambaram had given a one-time exemption from the capital gains tax to stockbroking firms turning corporate entities in his 1997-98 Budget.

BSE has drawn up a booklet containing the guidelines and forms for corporate membership, and has urged the members to send in their applications at the earliest to convert their firms into corporate entities within the December 31 deadline. The bourse has told its members, by way of a circular, to take "immediate steps" for the conversion so that it receives an even flow of applications, Damani said.

The scrutiny committee will call for a report, including the pending claims and liabilities against the member concerned, from the investor service cell of the exchange.

It has also said that at no point of time, the member is expected to have a debit balance in their general charges and valan account, especially at the time of conversion into corporate entities.

Under the BSE rules, every applicant is to nominate at least two whole-time directors for the purpose of representing the company. The directors should have a minimum of two years' experience in dealing with securities or as portfolio managers or investment consultants.

At present, the members are required to deposit a minimum capital of Rs 10 lakh in the form of cash and/or securities with a 30 per cent haircut. After the compilation of papers from the applicant, the exchange will put up a 15-day notice.

Thereafter, the scrutiny committee of the exchange would interview the designated directors and, if satisfied, will recommend the application to the governing board.

The governing board would then elect the new corporate member in place of the outgoing individual member.

We have told our members by way of a circular to take immediate steps for the conversion so that we receive an even flow of applications MG Damani