Stock Exhange Module 1

8/13/2019 Stock Exhange Module 1

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Stock Exchange

The stock exchange is the market for old

securities I.e those which are already been

issued.

A market in which securities are bought and

sold: "the company was floated on the Stock

Exchange (WIKI)


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Characteristic Stock Exchange

Risk/Return

Liquidity

Global Regulated

Volatility


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Listing on stock exchange adds to the prestige

of the firm, that helps the number of

subscriptions in first issue market

Listing in stick exchange gets the stock

exchanges involved in issue which helps them

making a fair issue


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Both the market are integrated into each

other, if the stock the stock prices go up so will

the new issue.


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Functions of stock market

Liquidity and marketability

Safety of funds.

Supply of long term funds Flow of capital to profitable venture

Motive for improved performance

Promotion of investment Reflection of business cycle


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Contd

Marketing of new issues

Miscellaneous Services


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Recognition of stock exchanges

The stock exchanges in India have to be

recognized by the central government under

SCRA (securities and contract regulation act

1956) and SEBI, any Stock exchange which

needs Recognition under SEBI act has to

submit an --


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Contd

-- application in prescribed manner to the

government, the application must comply the

following

1. A copy of bylaws of the stock exchange for

its operations

2. A copy of rules its constitution, governing

body, powers and duties of office bearers etc.


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Grant of recognition:- this will be granted by

government provided the following has been

fulfilled

1. The rules and by-laws of the stock exchange

applying for registration must ensure fair

dealing and protect the interest of the the

investors


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2. The stock exchange concern must be willing

to comply with any other conditions that may

be imposed by the government from time to

time.

3. The grant of recognition will be in the

interest of trade as well as in the public

interest.


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Renewal of recognition

If any stock exchange intends to renew its

recognition, it must once again make an

application to central government in the

aforesaid manner 3 months prior to expiry ofcurrent recognition.


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Withdrawal of recognition

The central government may withdraw the

recognition granted to any of the Stock

exchanges in the country at any time if it

opines that the recognition granted is againstthe interest of trade or public interest, While

doing so there should be ample opportunity

given to SE to explain the position. How eversuch withdrawal will have no effect on the

contracts entered before the withdrawal


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Organization of SE in India

The following stock exchanges perform as

AOP( Association of persons)

The Following are the list of stock exchanges

in India


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List of the stock exchange

Bombay Stock Exchange (BSE)

National Stock Exchange of India (NSE)

Indian Commodity Exchange (ICEX)

United Stock Exchange of India (USE)

Multi Commodity Exchange (MCX)

Over the Counter Exchange of India (OTCEI) Inter-connected Stock Exchange of India (ISE)

Madras Stock Exchange (MSE)

Coimbatore Stock Exchange (CSX)

Ahmedabad Stock Exchange (ASE)

Bhubaneshwar Stock Exchange (BhSE)

Cochin Stock Exchange (CSE)

Hyderabad Stock Exchange (HSE)

Calcutta Stock Exchange (CSE)


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Delhi Stock Exchange (DSE)

Bangalore Stock Exchange (BgSE)

Madhya Pradesh Stock Exchange, Indore

Jaipur Stock Exchange (JSE)

Magadh Stock Exchange, Patna

UP Stock Exchange (UPSE)

Vadodara Stock Exchange,Vadodara (VSE)

Guwahati Stock Exchange Ltd

Ludhiana Stock Exchange Association Ltd

Kanara Stock Exchange Ltd


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Mangalore Stock Exchange Ltd

Pune Stock Exchange Ltd

Saurashtra Kutch Stock Exchange Ltd Meerut Stock Exchange Ltd

Intrex Trade Exchange Ltd

United Stock Exchange of India Mahurat trading


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Management

The recognized stock exchanges are managed

by Governing Boards. The governing boards

consists of elected member directors from

stock brokers members, publicrepresentatives, government nominee, and

nominees nominated by SEBI.


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The Powers of Management

Selection of office bearers and setting up of

committees like listing committee, arbitration

committee, Defaulters committee etc.

Admission and expulsion of members.

Managing of properties and finances of the

exchange

Framing and interpreting of rules bylaws etc

for the regulation of stock exchange


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Adjudication of disputes among members or

outsiders.

Managing the best interest of affairs of the

stock exchange in the best interest of the

investors and public interest


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Members

To become a member of stock exchanges a

person must possess the following

qualification.

He should be citizen of India

He should not be less than 21 years of age

He should not have been adjudged bankrupt

or insolvent.


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Listings Of securities

The securities in BSE are listed in 3 different

groups

1. Group A

2. Group B

3. Group c


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Group A criteria

The company has equity base of Rs 10 crore

The Market capitalization of Rs 254-30Crore

The public holing's of 35-40% Have a share holders 15000 to 20000


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He should not have been convicted for an

offence involving fraud or dishonesty.

He should not be engaged in any other

business except dealing in securities.

He should not have been expelled by any

other stock exchanges in the country


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Group B

All companies not included in group A, care

clubbed under this category. B1 is ranked

higher than B2.

B1 and B2 groups will be merged as a single

Group B effective from March 2008.


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Group c

In group c only odd lots and permitted

securities are included.

A number of securities that are less than the

market lot are known as odd lots.


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Advantages of listings

Facilitates buying and selling of securities

Ensures Liquidity

Offers wide publicity Assures finance

Enables borrowing

Protects investors


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limitations

Leads to speculations

Degrades companies reputations

Discloses vital information to competitors


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Listing procedure

Certified copies of memorandum and articles

of association, prospectus or statement in lieu

of prospectus, underwriting agreements,

agreements with vendors and promoters etc

Specimen copies of shares and debentures,

letter of call and allotment

Copies of Balance sheet


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Copies of offers for sale and circulars or

advertisements offering any securities for

subscription or sale during last 5 years

Certified copies of arrangements with

managerial personnel

Certificates of dividends and bonus paid

during last 10 years


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A statement showing dividend or interest in

arrears ( if any).

A brief history of company

Particulars regarding its capital structure.

Particulars of shares and debentures for which

permission to deal is applied for their issue


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A statement showing the distribution of

shares along with list of highest 10 share

holders of each class or kind of securities of

the company stating the numbers of sharesheld by them.

Particulars of shares forfeited

Certified copies of agreements if any with the

industrial finance corporation, icici etc


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Listing agreement with necessary initial and

annual listings fee


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Criteria for listings

At least 60% of each class of securities issued

must be offered to the public for subscription

and minimum issued capital should be Rs 3

Crore

The minimum public offer for subscription

should atleast 25% of each issue

The issue must be advertised for 2 days at

least in News Papers


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The company should be of fair size 9 having

broad based capital)

There must be at least 10 public shareholders

for every rs 1 lakh share for fresh issue capital

and 20 in case of subsequent issue

A company having more than rs 5 crore paid

up capital must be listed on more than one SE,

listing on regional SE is compulsory


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The company must pay interest on interest on

the excess application money received at the

rates ranging between 4% 15% depending

upon delay beyond 10 weeks


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The certificate to the effect the shares form

promoters quota are not sold or transferred

for a period for 3 years must be submitted


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Listing obligations

The company has to notify the stock exchange

The date of board meeting at which the

declaration or recommendation of dividend or

the issue of right or bonus share will be

considered

Any change in company Mananagment by

death, resignation removal or otherwise


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Any issue of new shares ( before intimating to

share holders)

Any change in company's capital structure

Any material change in general character or

nature of companies business

Any reissue of fortified securities or issuing

reserve securities.


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Any action that will result in redemption,

cancellation or retirement of in securities

Any intention of drawing of listed securities

Any information necessary to enable the share

holders to apprise the companies position in

SE


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Additional Obligation

The company must recommend or declare all

dividend/ cash at bonus at least 5 days before

the commencement of the closer of the

transfer books

The company must advice the SE in writing of

all such dividend/ cash bonus recommended

or declared immediately after board meetinghas been held


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The company must close the transfer books

only for the purpose of declaration of dividend

or for the issue of rights/ bonus shares

The company must grant to shareholders the

right of renunciation in all cases of the rights

issue


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The company must undertake to maintain allthe letters of allotment regret, acceptance andrights serially and to issue letters allotment

and regret simultaneously at the same time The company must issue receipt for all

securities deposited for registration/exchange/ subdivision or for any other

purpose and it should not change any fee forit


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Listing Agreement

The stock exchange authorities will scrutinize

the application carefully and if they are

satisfied with all the particulars/ documents

submitted, they will call upon the company toexecute a listing agreement. The agreement

contains rules and regulations which the

company should strictly follow or the SE willhave the right to suspend or withdraw the

listing facility

Stock Exhange Module 1

Documents

Transcript of Stock Exhange Module 1