Guidelines on Equity Structure-358024297

8/11/2019 Guidelines on Equity Structure-358024297

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Department o Consumer A f f a i r ~ S >

Ministry

of

Consumers

Affairs ,

Food

and

Public

Distribution

Government

of India

New

Delhi

Guidelines on the Equity

Structure of the

Nationw i

de

Multi

Commodity Exchanges after

five ye' rs of operatts>.. l

F

No

. 121112007-IT

Dated 29

1

Jl iBy

2009

The Commodity Futures Derivative ma rkets were opened up in 2002 and

have witnessed very rap:d groNth thereafter Th cornrrodity

exchanges

have

played a key role in their axpansion. The

(3()vemnl:nt recognized

a1d

licenced

three

Nationwkie Multi Commodity Exchangss (NMCEs)- MCX , NCDEX and

NMCE-

\-vho

have completed five years of their operations in the commodity

de

nvatives rnari


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2-

Th:s issue

h s

been under

:he

considerati

on

of the Gove

mment

for some

time and it :s now pleased to issue the fo llowir.g guidelines in this behalf.

Gl idelines

3.

Government has po

vvers

t

i

ssue

new guidelines. Guide

li

nes

fo

r conversion

of

Regional Exchanges into National

Commod

ity Exchange needs to

e

spe:t out

This issue

has

been under the consideration of the Gol/emmenl for some time back

and after revis iting nd reviewing tr e current ownership structure of the existing

National

Commodity

Exchanges, the following Guidelines are laid down:

3.1 All National Commodity Exchanges shou ld have a paid up equity capital of

atleast Rs . 50 crore and Networth*

of

atleast Rs. 100 cro re as a go

in

g

concern and

on a continuous basis.

Note: Networth is defined in the enclosed Note 1)

3.2

The total shareholding of the class of entities

ment

ioned belcw should not be

less than 26%:

i Government Companies , as defined

in

the Companies Act 1956;

ii

Banks and Public financial institutions;

iii. Government Companies as defined

in

the Companies Act, 1956,

Cooperative Societies

as

defined in the Societies

Act

and Federations

manufacturing or marxeting agri inputs

or

marketing agri-produce or

owning and operating warehouses; and

iv. Warehousing Companies

in

the private

sector

having minimum five

years' standing in war&housing business and owning and operating

warehouses

in at least

tv lo

states.

However

,

the

total

s h r e ~ o l d i n g

of the Government compar.ies mentioned irl

sub paras (i) and (iii) above shall not e less than 1 0%.

3.3 No s'"lareholder. except

the

onginal promoters/investors, at the tlme

of

recognition as an NCE, either :ndividualiy

or

together with persons acting in

concert with

it,

shall hold more than 15%

of the

paid up equity capita of the

Exchange. For originai promoters/investors

this

limit will be the maximum of

26%

.


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3

In case

the

sharehoiding

of

each

of

the original promoterS/Investors includi

ng

the Anchor- Investor tal 's below 15%, one of the shareholders including th e

new

shareholders

may

e

allowed

by

FMC to act as n c h o

n v e s

and to

increase its equi ty shareholding to a maximum of 26%. TI1e shareholding of

Stooo Commodity Exchange (s)

will,

however, e governed by the

cond itions

con ta ined in Para 3.4 of these guide lines .

Explanation:

Anchor-Inv

esto

r' is an invest

or

wllo plays the

re

ad

role

in

managing the National Co

mmo

dity Excha:1ge.)

3.4 The shareholding

of

any single Stock/Commodity ExChange alongv.ith

persons acting in concert shall not

e

more

1ha

.n 15% of the subscribed and

paid up equity capital of the said Exchange. The cumulative shareholding of

such Exchanges in the relevant National Commodity Exch ange sha ll not

be

more

than 20 .

3.5 The sha reholders

of th

Exchange shall not have any

tr

ading interest either

as

a trading member or as a cl ient of the Exchange. The shareholding of a

broker/member

of any otiler commodity exchange shall not exceed

1%

and

the total

s h n ~ h o d i n g

of all such brokers/membe rs t

ake

n together shall not

exceed

10 of the

paid

up

equity capital.

They wirl

also not hoid any seat

in

the

Management/ Board of the

Exchange.

3.6 No non-corporate entity, apart from those covered by

the

preceding para 3.5.

shall hold more than one percent of the paid up equity capital of the

Exchange and the total

of

such hold ings together with that

of those

cove

red

y

para 3.5 sha li not

exceed

25% of the paid up

equity

cap

itai

of

the

Exchange.

3.7

Allotment

of

shares to foreign entities must be in confonnity

wnh

the

provisions of the Press Note

no

. 2 of 2008 dated March 12, 2008 issued by

the

Department

t l

r Jdustrial Pol

icy

&

Promotion, Government

of

India, subject

to any

changes there

in made

by

the

Government fron

ti

me

to

time

.


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-4-

3.8 rt is obligatory on all shareholde rs

of

the Exchat1g e to align the shar eholding

pattern, as per these present guideHnes and gu idelines that may e issued by

th e

Go

vernment Forward Markets Commission from time to tome.

4 The Exchange shall confirm to the Commiss ion

in

writing that the investors

in

who se favour the divestment/fresh issue

of

equity is made. fulfill the criteria for a

frt

and proper person' as defined in the enclosed Note 2.

5 A

ll

disinvestments or fresh issue of equity shares o more than 1% shall be

subject to the prior

app

roval of the Forward Markets Commission and before seeking

such approval,

the

Exchange should ensure that the proposal satisfies the above

requ irements.

6 . As

far

as

the

existing National

Commod

ities Exchanges are concemed,

the

last date tor compliance with the above guidelines shall be 30 h September 2010,

which can

be

extended by the Forward Markets Commission upto

30 t

September,

2011 in exceptional cases on genuine grounds.

( Brij Mohan I

Director T).


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ote

Networth : T

he

n

etworth for

the purposes of these

gu

idelines wi

be

computed

as under

:

1. Paid up equity share capital

dd

2.

Non-redeemable preference shares capital

3. Share premium paid in cash

4. Reserves and surplus

(excluding

capital reserve

re

valuation reserve,

and such other reserves which have been earm

arked

for specmc

purposes

and

are not available

for

distiibution

Less

5 Loans

and advances

except for the ones given for the purposes of

busmess

of

the Exchange.

6.

Investments in non-quoted compankJs for the purposes other than

developing infrastructure

for

or

in the

Commodity

Sector.

7. Investments in the non-marketable securities.

8.

l n v s t m n ~

n the quoted securiUes

in

excess of 10 of total equity

fund

.

9. Intangible assets acquired for cash for purposes other than the

business

of

the Exchange.


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CRITERION FOR A PERSON TO BE DEEMED

TO

BE

_f. FIT ND

R Q ~ R

PERSON'

For the purpcse of these QLJidelines, a person shall be deemed to

be

a fii and

proper person if -

(i)

such person has a general reputation and record of

f

i

mess

and integrity

including Dut

not

imited to -

(a) financial integrity;

b go.. ?d

reputation and characier; and

(c) honesty

(ii)

such

person

has

not incurred any of the following dis-qualifications -

(a) the person or any of its whole time directors or managing partners

hss been convicted by a Court for any offence invorving moral

luipitude or any economic offence, or any offence against any

laws;

(b) an order

for

winding up has been passed against th person;

(c)

the

person or any of its whole time directors or managing partners

has been declared insolvent and has not been discharged;

(d) an order restraining,

p r o i i t

~ or debarring the person, or any of

its whOle time directors

or

managing partners from dealing

in

commodities securities or from accessing the market has been

passed

by any

regulatory authority and a period of three )'ears

from the date of the expiry

of

the period spec ified

in

the order has

not elapsed;

(e) an

'

other order against the person

or

any

of

its whole time

directors or managing partners which has a bearing on the

commodities market, has been passed by any regulatory authorjty

and a period

cf

three years from the date

of

the order has not

elapsed;

(r) the person has been found to be of unsound mind by a Court of

competent jurisdiction and the finding

is in

force; and

(g) the person

is

financially not sound.

(iii)

If

any question arises as to whether a person is a fit and proper

person , the decision

of

the Forward markets Commission in this behalf shal be finaL

Documents

Guidelines on Equity Structure-358024297