Andhra HC upholds SEBI action derecognising stock exchange
Andhra Pradesh HC has upheld market regulator SEBI's decision to withdraw recognition of Hyderabad Stock Exchange.
By PTI |
HYDERABAD: Rejecting the contention that SEBI should have given the Hyderabad Stock Exchange more time for corporatisation process, the Andhra Pradesh High Court has upheld the market regulator's decision to withdraw recognition of HSE.
HSE, founded during Nizam's rule in pre-Independance days, has currently 774 listed companies and 292 share brokers as its members.
Corporatisation and demutualisation envisages that majority of the stake in stock exchange be held by common people (other than the brokers), so that there would be segregation of ownership, management and trading.
As per Securities and Contracts (Regulation) Act, all the stock exchanges are supposed to demutualise within a fixed time period or and risk de-recognition if not done so.
SEBI approved the Hyderabad Stock Exchange Ltd (Corporatisation and Demutualisation) Scheme on August 29, 2005.
As per the law, the stock exchange, within twelve months of its notification, must ensure that at least fifty-one per cent of its shares are held by the public other than shareholders having trading rights, that is the brokers.
SEBI gave HSE one year's extension as it could not complete the process in 12 months. But even then, it could not meet the new deadline (August 29, 2007), and SEBI issued notification withdrawing its recognition.
A group of brokers challenged the SEBI's action, saying that it should have granted more time. However, in the decision passed on January 17, Justice P S Narayana dismissed the petition.
HSE, founded during Nizam's rule in pre-Independance days, has currently 774 listed companies and 292 share brokers as its members.
Corporatisation and demutualisation envisages that majority of the stake in stock exchange be held by common people (other than the brokers), so that there would be segregation of ownership, management and trading.
As per Securities and Contracts (Regulation) Act, all the stock exchanges are supposed to demutualise within a fixed time period or and risk de-recognition if not done so.
SEBI approved the Hyderabad Stock Exchange Ltd (Corporatisation and Demutualisation) Scheme on August 29, 2005.
As per the law, the stock exchange, within twelve months of its notification, must ensure that at least fifty-one per cent of its shares are held by the public other than shareholders having trading rights, that is the brokers.
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SEBI gave HSE one year's extension as it could not complete the process in 12 months. But even then, it could not meet the new deadline (August 29, 2007), and SEBI issued notification withdrawing its recognition.
A group of brokers challenged the SEBI's action, saying that it should have granted more time. However, in the decision passed on January 17, Justice P S Narayana dismissed the petition.
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