BSE comes out with new corporatisation plan

BSE comes out with new corporatisation plan
ENS ECONOMIC BUREAU

MUMBAI, DECEMBER 17: The Bombay Stock Exchange (BSE) has taken an in-principle decision to corporatise and then demutualise (separate trading rights and ownership of the exchange) its membership structure. The plan, if found feasible, will be implemented by December 2000.

Announcing this at a press conference here today, BSE president Anand Rathi said that "the exchange, which had been set up as a trust would have to be first converted into a company. The legal issues are yet to be worked out, before we can talk about going public and whether it would be listed on the BSE itself or elsewhere." The BSE with 650 members has a networth of Rs 250 crore as at the end of March 1999.

The issues to be addressed by the consultant include cost benefits analysis of demutualisation, legal structure for the BSE and alternatives for demutualisation. Besides, other aspects like identifying modifications in rules, regulations and bye-laws of the exchange, stamp duty, capital gains and tax exempt status related issues,capital gain implication for members and listing on self or on other exchanges will also be studied.

The board is yet to decide on the legal structure for the exchange given that the company law has no provision for conversion of a trust into a company. ``We need to examine all alternatives for demutualisation as per the provisions of law,'' Rathi said.

Rathi said that "corporatisation and demutualisation is a trend emerging globally in exchanges (which were traditionally owned and controlled by brokers) as a consequence of growing competition and technology that has made geographical barriers redundant. ``Paris and London exchanges plan to demutualise and get listed in 2000. Both NYSE and Nasdaq plan to become profit-making companies. The corporate bodies ensure autonomy in governance and enjoy better image with regulators. In Singapore, the merger of the stock and futures exchange into a single company will eventually be followed by demutualization,'' he added.