HISTORY OF STOCK EXCHANGES UP.

STOCK EXCHANGE LIMITED BRIEF HISTORY

The U.P. Stock Exchange Association Ltd., Kanpur occupies a very Founder: Dr. prominent place among the existing Stock Exchanges in India. The G.H.Singhania Exchange was inaugurated on 27th August, 1982 by the then Finance Minister Shri Pranab Mukherjee. Right from its inception it has been playing a very prominent role in the development of capital market of Northern India. UPSE is the only Stock Exchange in whole of Uttar Pradesh and the membership of this Stock Exchange is not restricted to the territories of Uttar Pradesh only. Initially it had 350 members which were now increased to 540 members belonging to almost all important cities of the country. Members living outside Kanpur have contributed a lot by creating the equity cult in whole of the Uttar Pradesh. Not only this members are highly qualified and professional and devoted to the cause of capital formation in the country. The Exchange was initially started in the rented building but with the efforts of our members, a new complex was constructed and was inaugurated by His Excellency Shri R Venkataraman the then President of India on 8th February, 1989. At present we have 843 companies listed with the total capitalization of Rs.81184 Crores. The annual turnover of this Exchange for the last three years is: 1998-99: 18429 Crores, 1999-2000: 23876 Crores and 2000-01: 25112 Crores. Thus every year we have increased our turnover creating more and more awareness among the people of Northern India.

This Stock Exchange is wedded to the investors protection and investors education as we have firm conviction that any investor protection cannot be achieved without proper awareness and education of investors. Thus the Exchange has a very active investor service Cell and also a very equipped Research and Development Wing is functioning. We have also a very effective system of readdressing the investors complaints. The Exchange has one of the best developed Exchanges of the country so far its infrastructure is concerned. The Ex-Finance Minister Dr. Manmohan Singh, Ex-Commerce Minister Shri Pranab Mukherjee, other Central Ministers and Chief Ministers Uttar Pradesh have visited this Exchange and appreciated its efforts in maintaining the transparency and the integrity of the market. To keep pace of changing technology the Exchange has embarked upon the Project of Screen Based Trading. The On-line Trading based on VECTOR Software supplied by CMC has commenced on UPSE from 11th November 1997. To increase the further business and to facilitate the On-line trading facility to about 22 members at Lucknow an additional trading floor has been established at Lucknow. At present at the Additional Trading Floor at Lucknow 22 Lucknow based members have been allotted Computer Terminals which have been connected with UPSE main Server via VSAT. As per recent decision of SEBI for the revival of the smaller Stock Exchanges in the country, they can obtain the membership of big Stock Exchanges like, BSE, NSE, CSE etc. through forming a subsidiary company of the Exchange and in turn the members of the Exchange can trade through the said subsidiary as sub-broker(s). Accordingly we have incorporated a wholly owned subsidiary namely UPSE Securities Ltd. and obtained the membership of BSE to enable the members of UPSE on BOLT.

STOCK EXCHANGES IN INDIAN BACKGROUND

The Stock Exchange concept is more than a century old for the economy of India. The Bombay Stock Exchange was formed in 1875, while Calcutta Stock Exchange & Madras were formed in 1980 and the Delhi Stock Exchange was formed in the year 1947. The multi-tier securities exchange model was adopted in our country in October 1990 with the establishment of OTCEI. High profile National Stock Exchange was set up in 1993 to encourage stock exchange reform through system modernization and competition. In common parlance, stock exchange means, a place where stocks are traded .The word stock means Bond/ Equity shares/ Preference shares/Debentures etc and exchange means trading/transaction. Stock exchange provides liquidity for the stocks and securities. It is market that provides a platform to the owners of the securities/stock to sell their holdings at reasonable prices and also provides an opportunity to the prospective buyers to purchase the same.

Meaning of stock Exchange

According to Securities Contract (Regulation) Act, 1956, A body of individuals whether incorporated or not constituted for the purpose of assisting or controlling the business of buying, selling, or dealing of securities.

Functions of stock exchanges

A stock exchange has been variously described such as the barometer of adversity and prosperity of a nation, the nerve centre of finance and politics of a nation as in the most of the world. All the changing political, economic and industrial conditions of the nation are reflected on the stock exchange. A stock exchange gives encouragement to the promotion of Joint Stock Enterprise for the large manufacturing industries. It serves as a pivot of money and fortress of capital. Therefore, stock exchange is an important system in the capitalist economy. A stock market is a market, which aims at providing as continuous, free and fair market, where buyers and sellers can come in contact and deal in shares and debentures. It provides a ready market where shares and securities can be exchanged and transferred with the minimum of time and maximum of profit. Unhealthy speculation and other undesirable practices are condemned; otherwise stock exchange will be a disaster. Some of the economic functions of stock exchange are as follows:

Provides Ready MarketA Stock Exchange provides a free, fair & continuous market in securities. A holder of securities may at any time get back his money by selling off his holdings in a Stock Exchange. It promotes investment by offering a vide choice in securities both on consideration of yield and safety against depreciation in their values.

Facility for transfer of securities-

Stock Exchange provides sufficient marketability of the securities a dealt there in and ensures their price connectivity. In Stock Exchange, every security constitutes a separate market for itself. One cannot buy and sell securities unless some facility, by which buyers and sellers can meet together and deal in securities, is provided. The Stock Market provides the facility as it is simply a place of traffic in stocks and shares.

Mobility of CapitalIn addition to provide a market, the stock exchange has largely helped in directing the accumulated wealth of the country into fruitful channels. The stock exchange is not like investment trust or any other investment institution. It merely provides an open market for the sale and purchase of securities. It directs the flow of new earnings into investment leading to the production of wealth into two ways. First, by purchase of securities by the buyers (savers) directly. Secondly, by placing the saving with financial institutions to reinvest the funds in securities.

Stability and Liquidity of CapitalAn investor can withdraw his capital at any time either for other investment or for personal need by selling the shares in the stock market. It is interesting to note that capital can be withdrawn without affecting the industry. Thus, the investment is made liquid and easily disposable.

Increase the Number of Dealings-

The stock exchange provides the facility for secondary distribution of new securities, after the original sale of securities. The supply of shares of a particular industry cannot be increased with every change in prices, though the stock available in the market at a particular time may vary a little. The Stock Exchange creates an interest and willingness in the mind of investors to invest in securities. It increases the marketability of securities, since some securities are brought and sold again and again. Readily saleable securities serve a good collateral security for loans.

Safety of Dealings An organized stock exchange functioning under government regulation provides a reasonable measure of security and safety of dealings in securities to the investors through its rules and regulations. The risk of the investor is considerably reduced when he purchases securities, which are ordinarily dealt in a Stock Exchange. The stock exchanges before giving permission to deal require the observance of a rigid set of rules by the company and call for certain information with a view to safeguard the interest of the investors. The information supplied is examined impartially and then permission is granted. Thus, it creates confidence in the minds of the investor.

Financing Industry The Stock Exchanges encourages investment in industries more than any other institution. The investment flows in corporate securities so that the nation can achieve industrial development and economic progress. Moreover, the condition of the company is visible since the price of securities shows the real worth, which depends upon the serving capacity

and future development of the company. In short, industrial development, saving investments and capital formation are the benefits of a Stock Exchange.

Wider Share Ownership Establishment In addition to the basic function, a well organized modern Stock Exchange is also expected to educate the masses in the art of investment in Stock Exchange and thereby, promote wider ownership amongst individual is of particular significance to the developing countries wherein savings are scattered for further income. Through it, new sources of capital can be tapped.

Economic Barometer An ideal Stock Exchange serves to allocate only just enough funds for any industries and checks the flow of capital when an industry begins to show diminishing or uneconomical returns. This is achieved through keeping an eye on price movements of the securities.

Other Functions Other functions performed by Stock Exchange are that the market price established in trading are useful for tax purpose. The stipulation on disclosure and transparency ensures availability of information on listed companies, particularly in regard to financial conditions and protect investor interest by eliminating dishonest and irregular practices in the brokerage made.

AN INTRODUCTION TO SELECTED STOCK EXCHANGE:

Besides the regional stock exchange three national stock exchanges have been set up in India

The Bombay Stock Exchange: (BSE)

The Indian Stock Market is one of the oldest markets in Asian Markets. Its history dated back to nearly two centuries when the records of security dealings in India with merger and obscure. The East India Company was dominant in those days and business in its loan securities was transacted to words the close of the 18th century. By the 1830 business in corporate stocks and shares in bank and cotton presses took place in Bombay. Though the trading list was broader in 1839, there were only half a dozen brokers recognized by banks and merchants.

The Bombay Stock Exchange has been converted into company for very recently. Now it is known as Mumbai Stock Exchange Ltd.

The National stock Exchange (NSE)

The National Stock Exchange of India Limited was set up to provide access to investors from across the country on an equal pooling. NSE was promoted by leading financial institutions at the best of the Government of India and was incorporated in Nov.1992 as a tax-paying company, unlike other stock exchanges in the country.

On its recognition as a stock exchange under the securities contracts (Regulation) Act, 1956 in April 1993, NSE commenced operations in Nov. 1994 and operations in the derivatives segment commenced in June 2000

Inter-connected Stock Exchange Ltd. (ICSE)

In October 1997, SEBI granted an in-principal approval to the proposal of the interconnected Stock Exchanger Ltd. (ICSE) to set up a national level Stock Exchange under section-4 of the Securities Contract Regulation Act (SCRA). ICSE has been promoted by 14 regional stock exchanges and may be incorporated as a company under the provisions of the companies Act 1956. ICSE provide training, Clearing, settlement, risk management and surveillance support to the inter-connected market system. The Stock Exchange has set up ISE securities and services limited (ISS) to take membership of NSE and BSE, so that trader and dealers through ISS can access other markets in addition to the local market. It is a landmark development in integrating securities market.

Legal and Regulatory Frame Work:

The four main legislations governing the securities area) The securities contracts regulation Act 1956 provides the regulation of transactions in securities through control over stock exchanges. b) The Companies Act 1956 which sets out the code of conduct for the corporate sector in relation to the issue, allotment and Transfer of Securities and disclosure to be made in public issues.

c) The SEBI act, 1992 which establishes to project investors and develop and regulate securities market. d) The depositories act, 1992 which provides for ownership of dematerialized securities. maintenance and transfer of

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SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI)

GENESIS:The SEBI was established on April 12,1988 through an administrative order, but it became a statutory and really powerful organization only since 1992.The CICA was replaced and the office of the CCI was abolished in 1992,and the SEBI was set up on 21 February 1992 through an ordinance issued on January 30 1992.The ordinance was replaced by the SEBI Act on April 4,1992.Certain powers under certain sections of SCRA and CA have been delegated to the SEBI .The regulatory powers of the SEBI were increased through the Securities Laws(Amendment) ordinance of January 1995 which was subsequently replaced by an Act of Parliament. The SEBI is under the overall control of the Ministry of Finance, and has its head office at Mumbai .It has now become a very important constituent of the financial regulatory framework in India.

OBJECTIVES:The philosophy underlying the creation of the SEBI is that multiple regulatory bodies for securities industry mean that the regulatory system gets divided ,causing confusion among market participants as to who is really in command .In a multiple regulatory structure, there is also an overlap of functions of different regulatory bodies. Through the SEBI, the regulation model which entrusted to a single highly visible and independent organization, which is backed by a statue, and which is accountable to the Parliament and in which investors can have trust.

CONSTITUTION AND ORGANISATION:The SEBI is a body of six members comprising the chairman, two members from amongst the officials of the ministries of the central government dealing with finance and law, two 11

members who are professionals and have experience or special knowledge relating to securities market, and one member from the RBI. All members, except the RBI member are appointed by the government, who also lays down their terms of office, tenure, and conditions of service, and who can also serve any member from office under certain circumstances .The Central government is empowered to supersede the SEBI in public interest ,of if on account of gave emergency it is unable to discharge its functions or duties, or if it presently defaults in complying with any direction issued by the government ,or if its financial position and administration deteriorates. The work of the SEBI has been organized into five operational departments each of which is headed by an executive director who reports to the chairman. Besides, there is a legal department and the investigation department .The department has been dividing into divisions. The various departments and the scope of their activities are as follows:-

The Primary Market Policy, Intermediaries Self Regulatory Organizations (ISRO) and Investors Grievance and Guidance Department:It looks after all policy matters regulatory issues in respect of the primary market registration merchant bankers, portfolio management service's investment advisors ,debenture trustees ,underwriter, SROs and investor grievance ,guidance ,education and association.

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The Issue Management and Intermediaries Department:It is responsible for vetting of all prospectus and letters of offer for public and right issues for coordinating with the primary market policy, for registration, regulation and monitoring of issues related intermediaries.

The Secondary Market Policy, Operations and Exchange Administration, New Investment Products and Insider Trading Department:It is responsible for all policy and regulatory issues for secondary market and new investment products, registration and monitoring of members of stock exchanges, administration of some of the stock exchanges, Market surveillance and monitoring of price movements and insider trading, and EDP and SEBI's data base.

The Secondary Market Exchange Administration, Inspection and Nonmember Intermediaries Department:It looks after the smaller stock exchanges of Guwahati, Indore, Bhubaneswar, Ludhiana and Cochin. It is also responsible for inspection of all stock exchanges and registration, regulation and monitoring of non-member intermediaries such as sub brokers.

Institutional Investment (Mutual Funds and Foreign Institutional Investment), Mergers and Acquisitions, Research and Publications, and International Relations and IOSCO Department:It looks after policy, registration, regulation and monitoring of Foreign Institutional Investors (FIIs), domestic mutual funds, mergers and substantial acquisitions of shares 13

CORPORATIZATION AND DEMUTUALIZATION 2005

Most of the Stock Exchanges around the world were set up as association of the Trading members. The objective to set up association was aimed to create a formal institution for mutually regulating the securities transactions among the members. Thus, most of the Stock Exchanges were promoted as non-profit organizations. While, the management of the Stock Exchange was generally vested with elected representative(s) of the trading members, executives carried out the day-to-day functioning of the Stock Exchange. However, during last two decades attempts have been made to change the profile of the Stock Exchange by demutualising them and reconstituting them as commercial corporate entities.1 Demutualization of a Stock Exchange entails that it is no longer remains entity for mutual benefit of trading members but beholds the larger objective of becoming the system with adequate checks for proper mobilization of capital & protecting the interest of investors at large. Corporatization is a critical enabler that would support the efforts in expanding and strengthening the Indian capital market. While things are becoming more business oriented, The corporatized Stock Exchanges will improve its flexibility and efficiency in terms of its responsiveness to market needs2. The need for corporatization of Stock Exchanges in India has recently came into lime light after functioning of Mumbai Stock Exchange is alleged to have been manipulated by the some of the Trading members on governing Board of the exchange, which followed by stock markets crash in spite of what was seen as one of the favorable & progressive Union Budget in recent years3. After the stock scam of March 2001, the Government finally announced that all stock 14

Exchanges would have to mandatorily go in for demutualization within a specified timeframe4. This was aimed at preventing conflict of interests, which arise when Stockbrokers are involved in the management of the stock exchanges also. It is in this context it becomes necessary to study the need and impact of Corporatization of Stock Exchanges and its relevance in Indian context before a clear roadmap could be prepared to take this process forward, for which SEBI constituted a Group under the Chairmanship of Justice M. H. Kania, former Chief Justice of India comprising of eminent personalities, in fields of law, accountancy, finance, company law affairs and taxation to advise SEBI on this matter and to recommend the steps that need to be taken to implement the announcement of the Government. So as a result of this the Government has approved the corporatization of stock exchanges in India by which ownership and trading rights would be segregated from each other .corporatization and demutualization of stock exchanges are complex subjects and involve number of legal, accounting and company law issues. These roadmaps could be prepared to take process forward. Historically, brokers owned, controlled and used to manage stock exchanges. In case of dispute, the self often got procedure over regulations leading inevitably to conflict interest. The regulator therefore focus on reducing the dominance of members in the management of stock exchanges and advised to reconstitute their governing council to provide at least 50% non brokers representatives. This did not materially alter the situation. Thus finally in face of volatility in the securities market, government proposed in marc 2001 to corporatize the stock exchanges by which the ownership, management and trading members could be segregated from one another.

DEPARTMENTS OF U.P.S.E
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CHAIRMAN EXECUTIVE DIRECTOR

Mr. KD GUPTA Mr. B.K NADHANI

U.P.S.E SECURITIES LTD (SUBSIDIARY CO.)

Mr. VED PRAKASH (CEO)

LISTING & MEMBERSHIP DEPT

Mr. BP GUPTA

SECRETARIAL DEPARTMENT

Mr. CHANDRA BABU PR

FINANCE & ACCOUNT

Mr. S.C KAPOOR

MARKET OPERATION / MARGIN

Mr. JK DIXIT

LEGAL DEPARTMENT

Mr. JN SHUKLA

CLEARING HOUSE

Mr. LS PANDEY

SURVEILLANCE DEPARTMENT R& D / INVESTORS SERVICE CELL

Mr. ATUL AGGARWAL Mr. RAJENDRA VERMA

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UTTAR PRADESH STOCK EXCHANGE (UPSE) ASSOC LTD. HISTORY/BACKGROUND

1.

Name of Stock Exchange

The Uttar Pradesh Stock Exchange Association Ltd.

2.

Registered Address

`Padam Towers 14/113, Civil Lines, Kanpur

3.

Date of Establishment

15th November, 1979

4.

Nature of organization

Corporate body.

(Whether a company or Association of persons) (If company, please indicate whether limited by guarantee or shares). (If company limited by shares, then indicate shareholding pattern)

Public Limited Company registered under the Companies Act, 1956.

Total Shares issued: 1000 (One share of Rs.2000/- each)

Shareholding pattern in the recognized Stock Exchange as on 30.09.2008

Category of Shareholder

No. of Shareholders

Total Number of Shares 17

Percentage of Shares

TRADING MEMBERS Individuals Corporate (Listed) Corporate (Unlisted) Any other (specify) TOTAL (A)

177 03 62 NIL 242

177 03 62 NIL 242

17.7 0.3 6.2 -24.2

PUBLIC Individuals 257 717 71.7 Corporate (Listed) NIL NIL NIL Corporate (Unlisted) 32 41 4.1 Any other (specify) NIL NIL NIL TOTAL (B) 289 758 75.8 Total (A+B) 531 1000 100% Uttar Pradesh Stock Exchange Association Ltd. was inaugurated on 27th August, 1982 and occupies one of the prominent places among 24 Stock Exchanges in India. It plays an important role in the development of the capital market of North India. Initially, it had only 350 members which have grown up to 540 at present. The membership is open to companies even beyond the territories of Uttar Pradesh. At present UPSE as 683 companies listed with the total capitalization of Rs 81,184 crores. The annual turnovers of this exchange for past three years are: Year Total Turnover (Single Sided) 2006-07 2007-08 2008-09 31.10.2008) (Rs. In Crores) 806.50 476.39 to 170.60 Delivery turnover 0.28 0.98 0.05 % of turnover to Delivery 0.03 0.21 0.03

(up

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This stock exchange is wedded to the investors protection and investors education as UPSE has firm conviction that any investor protection cannot be achieved without proper awareness and education of investors. Thus, the exchange has a very active investor service cell and also a very equipped research and development wing in functioning. UPSE has also very effective system of readdressing of the investors complaints. The exchange is one of the best developed exchanges of the country so far its infrastructure is concerned. The Prime minister Dr. Man Mohan Singh, Finance minister shri Pranab Mukherjee, other central ministers and chief ministers of Uttar Pradesh have visited the exchange and had appreciated its efforts in maintaining the transparency and the integrity of the market. To keep pace of changing technology the exchange has embarked upon the project of screen based training. The online trading based on VECTOR software supplied by Cmc has commenced on UPSE from 11th November, 1997. To increase the further business and to facilitate the online trading facility to about 22 members at luck now an additional trading floor was established at Lucknow. Seeing lack of participation by investors, UPSE has closed down its landmark Additional Trading Floor (ATF) at Lucknow. The ATF was set up initially to further increase business and to provide online trading facility to Lucknow based members. It commenced online trading in March 1999 with 22 members, who were allotted computer terminals at the ATF. The terminals were connected with UPSE's main server via VSAT. It is noteworthy to note that at present out of 17 regional stock exchanges recognized in India only 2 regional stock exchanges are functioning and are still generating some turnover. UPSE is among those two regional stock exchange, the other one being Calcutta stock exchange.

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As per decision of SEBI for the revival of the smaller stock exchanges in the country, they can obtain the member stock exchanges like NSE, BSE, and CSE etc by forming a subsidiary company of the exchange and in turn the members of the exchange can trade through the said subsidiary as sub- brokers. Accordingly they had incorporated a wholly owned subsidiary namely UPSEC and obtained the membership of BSE to enable the members of UPSE on BOLT. They are at present trying to get membership of NSE.

MAJOR OBJECTIVES OF UPSE

To organize and carry on the stock exchange and regulate the business of the exchange , stocks, shares , debentures , debenture stocks , government securities , bonds and equities of any description and with a view to establish and conduct stock exchange in Kanpur.

To acquire the membership of any other recognized exchange in India and abroad including membership of OTCEI , broad base the operation of stock exchange for the benefit of general public & investors.

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To promote one or more subsidiary whether wholly or partly owned with object to promote & trade in shares & stocks , debenture bonds and other securities of any description issued by companies , statutory corporations, government of state or union Government , financial institutions.

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UPSE SECURITIES LIMITED

(Commonly referred in as subsidiary company) The formation of UPSE securities ltd is the outcome of various underlying reasons. To understand that, time would have to be set back to late 20th century... Prior to that ,the regional stock exchanges were receiving a great source of revenue as listing fees of various companies .Every company was supposed to list themselves in regional stock exchange where their head office existed .so besides mandatory listing in regional stock exchange ,it was the fashion among companies to list themselves in more and more stock exchange But slowly in 2003 ,SEBI totally called the mandate and awarded freedom to get listed in any stock exchange All factors contributed to companies to get delisted from regional stock exchanges. This move vanished the major source of revenue of RSE. So, it was decided in a meeting held on September 9, 1999 to promote or float a subsidiary company to acquire membership right of other big stock exchanges i.e. NSE /BSE subject to under noted conditions: The subsidiary company shall be 100% owned by stock exchanges promoting/floating such subsidiary company. The name of the company shall not contain the word stock exchange. The members of stock exchange shall register themselves as sub .brokers of subsidiary company to enable them through subsidiary company. The subsidiary company shall register only the members of stock exchange, which is promoting the subsidiary company as its brokers, and no other client/sub broker shall be entertained by subsidiary company.

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The sub broker of the subsidiary company shall maintain separate deposits with the subsidiary company. The Base Minimum Capital deposited by the sub broker with the promoting stock exchanges shall not be transferred to the subsidiary company.

The trading / exposure limit of the sub-brokers shall be based on the deposit received by the subsidiary company from the sub broker and these limits shall not exceed the limits as prescribed by the stock exchange of which the subsidiary company is a member.

The subsidiary company shall collect margins from the sub brokers for the payment of margins to the respective stock exchange of which subsidiary company is the member. The margin imposed by the subsidiary company on its sub broker shall not be less than the margin payable to the stock exchange of which the subsidiary company is the member.

The stock exchange shall incorporate the above mentioned condition in the Memorandum of association and Article of Association of the subsidiary company.

So based on this decision taken on the meeting it was decided by board of directors of UPSE to set up their wholly owned subsidiary named UPSE SECURITIES LIMITED. UPSE securities ltd., a wholly owned subsidiary of U.P Stock Exchange Assn. Ltd. was incorporated on 19.04.2000 with the object to obtain membership of larger Exchanges such as BSE/CSE and provide trading facilities on these exchanges to the member of U.P stock exchange as its sub brokers as per the policy/guidelines issued by SEBI. Accordingly the company acquired the membership of BSE and commenced on-line trading of BOLT with effect from 26.01.2001. The company is limited by shares and its 100% shares are held by UPSE .Its issued and subscribed share capital was of RS 1,80,73,700 which was its initial funding and till date their has been no subsequent funding.

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To facilitate pay-in and pay-out of funds, the company has adopted the branch model of business module for settlement of transactions at company level and consequently separate bank account and beneficiary demat account, designed to each of the active sub-broker, treating it as a virtual branch of the company facilitating the accounting etc.

Other basic informations about the UPSE are:

UPSEC will open equivalent number of bank accounts for each sub brokers in the name and style of UPSEC securities ltd. These banks accounts will be opened either with Standard Chartered Bank , M.G road, Kanpur or with UTI bank LTD, Mall road, Kanpur as per the choice of the sub broker concerned. It will be the responsibility of the sub brokers to clear all the dues / pay in of their clients within time as per the schedule of the UPSEC i.e. T+1 basis. The shortfall in the pay in of the fund, if met by the sub broker from their own account, shall be credited to the contingency deposit account of the sub brokers. UPSEC will not pay any interest on this deposit. Every client of the sub- broker will have to clear his / her debit balance in respect of the transactions undertaken latest by T +4 days. UPSEC will issue the contract notes to all the clients of the sub- brokers on the regular basis. Brokerage will be charged from the clients of the sub brokers as per the instructions filled up in the client registration forms received through the sub-brokers or any written modification authorized by the clients and the sub brokers thereafter. 24

The share of brokerage of UPSEC from the total brokerage charged to the clients of the sub-brokers shall be 0.009% subject to minimum of 1 paisa per share. UPSEC shall refund the excess brokerage to its sub brokers weekly.

All other statutory and legal charges such as stock exchange turnover charges, stamp duty, STT, service tax etc as applicable will be levied separately in the contract notes issued to the clients of the sub brokers.

Sub- brokers who are interested in second, third trading terminal are allowed to have them by allotting them separate ID on the following terms and conditions: Sub broker will have to pay a sum of Rs 5000 for each such trading terminal. Separate monthly charges such as TWS charges, VSAT support charges etc as applicable from time to time will have to be paid by the sub broker for each such terminal. Each such terminal shall be subject to fulfillment of margin and other applicable business rules. Presently BSE has allowed trading only in cash segment. ----29-11-2001 113 70 8000(APPROX)

TRADING ON BSE STARTED ON NUMBER OF REGISTERED SUB-BROKERS NUMBER OF ACTIVE MEMBERS CURRENT NUMBER OF CLIENTS TURNOVERS: (IN CRORES) 2000-01(FROM 29-01-2001) 2001-02 2002-03 25

----

67.99 981.88 1907.64

2003-04 2004-05 2005-06 2006-07 2007-08

---

2334.55 2493.73

-- 1813.24 -- 2164.10 -- 3124.08

PROFIT / LOSS OF THE COMPANY

YEARS 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

PROFIT/LOSS LOSS LOSS PROFIT PROFIT PROFIT

AMT IN Rs 3,99,241.91 10,67,493.51 7,84,000 18,20,000

12,93,000 PROFIT 7,98,000 PROFIT 6,36,000 LOSS 21,964 26

Thus, the scope of UPSEC is indeed very wide and in future periods it will surely further expand the levels of business leading to the lucrative gains to the corporate, investors and finally its members.

LISTING DEPARTMENT
Before talking about listing department I would like to throw light on the basic jargon words used in this department.

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Listed company means a company which has any of its securities offered through an offer documents listed on recognized stock exchange and also includes public sector undertaking whose securities are listed on recognized stock exchange. Public issue means on an invitation by a company to the public to subscribe to the securities offered through a prospectus. Right issue means an issue of capital under sub section (1) of section of companies acts 1956 to be offered to the existing shareholder of company through a letter of offer. Composted issue means an issue of securities by listed by listed company on a public cum right basis offered through a single offer document wherein the allotment for pubic & right component of the issue is proposed to be made simultaneous. Offer document means prospectus in case of public issue of offer for sale & letter of offer in case of a right issue. Unlisted company means a company, which is not, listed company. Application for listing No company shall make any public issue of securities unless it has made an application for listing of those securities in stock exchange(s) Security At the time of public/right Issue Company deposit 1% security of the issue.50% in cash &50% in bank guarantees for protection of investors. Depository means a body corporate register under SEBI (Depositories and Participants) Regulation, 1996. Listing Agreement At the time of listing it is a requirement of the exchange that there must be filed with the application an agreement in terms to qualify for admission and continuance of said securities upon the list of exchange.

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As per listing agreement companies agree to submit all the required documents with the exchange for the information.

Delisting There are two types of delisting: voluntary delisting & compulsory delisting. Voluntary delisting: Voluntary delisting being by the promoters of the company. Procedure for voluntary delisting: Any promoter or acquirer desirous of delisting securities of the company under the provision of these guidelines shall: a) Obtain the prior approval of the shareholders of the company by a special resolution passed at its general meeting. b) Make a public announcement in manner provided in these guidelines. c) Make an application to the delisting exchange. d) Comply with such other additional conditions as may be specified by the concerned stock exchange.

Compulsory delisting of companies by exchange

The stock exchange may delist companies which have been suspended for a minimum period of six months for non-compliance with the listing agreements. The stock exchanges may also delist companies as per norms provided in schedule. The stock exchange shall give adequate & wide public notice through newspapers including (one English national daily of wide circulation) & through display of notice on the notice board/website/trading systems of the exchange. The stock exchange shall give a show -cause notice to the company or adopt procedure provided under part B of schedule III for delisting under clause15 (1) and (2).

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MEMBERSHIP DEPARTMENT
The department mainly deals with Memberships/Membership Admission/Transfer/Conversion/Registration/Surrender of Certificate of Registration of SEBI. Admission to Membership of the Exchange is Governed by the eligibility criteria as specified in Article 19 of the Articles of the Exchange which states :-

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 An individual applying for Membership of Exchange should :1) Be not less than 21 years of age. 2) Have a qualification of Matriculation of equivalent examination (SEBI requires minimum Intermediate) 3) Be a citizen of India. 4) Possession a minimum of two years experience.

In dealing in securities or As portfolio manager or As investment constitute

Minimum net worth / capital of Rs.lac as certified by CA Its an undertaking to the effect that:-

He/ She are not associated with any defaulting member of Exchange. He/ She have not introduced any fake account /forge/stolen share in the market. No investigation /enquiry are pending against him/her in any Exchange.

BODY CORPORATE:1) Minimum net worth requirement for corporate seeking admission to membership of the Exchange, is Rs 20 lacs in case of direct corporate and Rs 10 lacs in case of conversion cases i.e. in case of individual to corporate .

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2) Two Designated directors to remain on the Board of the Company. Eligibility criteria for designated directors to be the same in case of individuals. 3) Entity must have been incorporated under companys act 1956. 4) It must at all times maintain requisite net worth. 5) It should comply with section 12 of companies act. 6) And it should satisfy all such conditions as may be prescribed in the articles.

For any change in status and constitution of Members in terms of SEBI Cir No.30 dated 09.07.03 member is required to obtain prior Approval of exchange as well as SEBI. At the same time, of effecting any change member must ensure that all SEBI and Exchange dues have been paid.

AUDIT AND INSPECTION DEPARTMENT:1. Maintaining records of Audited Balance sheets of Members:Every year, every active member is required to submit their audited balance sheet and Net worth certificate in the Exchange. The department is responsible for collection of the Audited balance sheets to be submitted by All active members and imposing penalties in cases of late submission of B/S beyond the stipulated time

2. Inspection of books of account of members:-

32

As per SEBI guidelines, Exchange is required to conduct inspection of 20% active members in each financial year. Accordingly, the department selects the names of the members to be inspected (Finalized by Executive Director), on the basis of turnover in the manner that the cross section of all members is covered. Few names are selected against whom complaints have been lodged in the Grievances & Complain Department by Investors. Few other names are taken from the members against whom surveillance action has been initiated.

The work of inspection of brokers is assigned to independent Charted Accountants. The C.A. as per the checklist provided by the Exchange conducts inspection. Inspection reports are forwarded to members, there by seeking replies. Inspection files are placed before the Disciplinary Committee for consideration and further action.

3. SEBI Registration fees paid by the Members:As per SEBI Stock Brokers and Sub Brokers Regulations 1992, every broker registered with SEBI and hold a certificate of Registration of SEBI, is required to pay SEBI fees based on his turnover through the Exchange. This work is also handled by the department.

Members are advised to summit a C.A. certificate showing their turnover under different heads i.e. jobbing of market trades etc. in the prescribed format in the Exchange with the prescribed limits.

33

4. SEBI Registration Fees/ SEBI Turnover fees/ SEBI fees:Schedule III of SEBI Stock Brokers and Sub Brokers Regulations 1992 specify the fees to be paid by the stock brokers. Every Member is required to pay registration fees in the manner set out below: Where the annual turnover does not exceed Rs. 1 crore during any financial year, a sum of Rs 5000 for each financial year Where the annual turnover exceeds Rs 1 crore during any financial year, a sum of Rs 5000 plus one hundredth of one percent of the turnover excess of Rs 1 crore for each financial year. After the Expiry of Five financial years from the date of initial registration as members , he is required to pay a sum of Rs 5000 for each and every block of five financial years commencing from the sixth financial year after the date of grant of initial registration. Every year , details of various components of the total turnover are to be finished by each and every Active Member in the Exchange within the prescribed time limit. Turnover shall be computed as aggregate of sale and purchase done by the Member in his own account and the account of his clients. In case of jobbing transactions which have been square off during the same day and such transactions have not been taken by the broker on the behalf of his clients fees at the rate of 0.005% is payable on the sale transaction i.e. Rs 500 on every Rs. 1crore .No fee is payable on purchase Transaction. Thus at large, incidence of fees on total jobbing transaction comes to Rs. 250 per Rs.1 crore. In case of members fails to submit the transactions details then fee at a flat rate of 0.1% on the total turnover is payable by the member i.e. Rs 1000 0n every Rs 1 crore turnover.

34

SECRETARIAL DEPARTMENT
Governing board: The governing board of Uttar Pradesh stock exchange association limited consisted or 13 members, prior to SEBI step of appointing an administrator instead, classified as follows:

35

Six elected members under the provisions of the articles of association of exchange. 2 government nominees appointed by SEBI 4 public nominees (a list of 12 persons was sent by UPSE association limited board with the approval of SEBI.

1 member is Executive director who is appointed by the UPSE association limited board with the approval of SEBI.

At every Annual general meeting of the exchange 1/3 of the members elected on the governing board retire by rotation; provided that where a person has been a member, elected for 2 consecutive terms on the governing board, he shall not be eligible for reelection for a further period of 2 years.

As per existing articles, there is a provision for election of president of the exchange out of the non elected members on the governing board. He will hold the office of president for a period of 1 year. However w.e.f. 12 July, 2002 SEBI has supposed the governing board of the exchange & appointed an administrator and all the powers and functions of the governing board are with Administrator, under section 11 of the Securities Contract (Regulation) Act, 1956.

36

Statutory Committee In addition to the committee of Board of Directors, if any referred to in the above Article, the Board of Directors, every year and as early as convenient after every Annual General Meeting ,appoint the following committee, namely:

Arbitration Committee Defaults Committee Disciplinary Committee

This committee consists of 60% non -members and 40% members with prior approval of SEBI. President and Executive Director are members of each of such committees and the President generally besides over each of the meetings of such committee.

Besides the above committees, the following committees are also constituted by the governing Board of Exchange every year: Computer Breakdown Committee. Ethics Committee. Screening Committee.(membership transfer, admission related) Compulsory delisting committee. Investors service committee.

Surpassing the Board by a single administrator all the powers have transferred to administrator. 37

Besides handling the corresponding work with SEBI/Ministry/Income Tax the following works are also handled in secretarial section. Compiling and forwarding the monthly development, report of SEBI. Coordinating with other departments of the exchange for the implementation of various SEBI circulars. Compiling and forwarding the pre-inspection report. Compiling and forwarding the compliance report on the SEBI inspection report (conducted every year). The section also fulfills all statutory requirements under companies act like: Preparation of board meeting, notices, agenda, minutes. Preparation of notices calling AGM & EGM. To handle all the company related affairs under companies act.

Similarly works relating to UPSE Securities Ltd. (a wholly subsidiary of UPSE Assoc Ltd) are also handled by the section.

38

FINANCE & ESTABLISHMENT

Finance department keeps watch over the financial matters. Apart from keeping record of daily financial activities, the department also tackles the HR activities under establishment Department. The UPSE Assoc. Ltd is registered under section 12A of the income tax act 1961, the accounting standard 22 (Accounting for taxes on income) is not applicable to the company. Therefore, a statement of income & expenditure A/c is prepared in place of profit & loss A/c. And according to the taxation compliance, it has to spend its 85% of income on various valid heads, if not; it has to make declaration about expenditure plans. Membership fees Rs 6000 per annum. Listing fees based on paid up share capital. Interest on BMC and other securities. Maintenance charges of terminals. Penalties and fines. Transaction fees (Minimum Rs 10000 and beyond graded system is applicable). 1% of listing fees (up to 2004-05, it was 2%) is for investor service cell fund, 10% of which is transferred to UPSE investor protection fund. UPSE Investors protection fund is created to protect from the losses incurred due to exchanges exchange members. But an exchange ceils compensation limit Rs 10 lakh per broker.

39

UPSE has a heavy infrastructure (building & premise) that UPSE gives on rent to its members only for various purposes. Outsiders also may hire it for social or Academic purpose only.

The Exchanges are required to contribute 5% of the listing fees collected by them from companies to SEBI every year.

The expenditure head also includes operational, legal and other nominal expenditures. The department also maintains the regular records of its employees, maintains their provident fund and also works for their welfare.

In terms of Rule 14 of the SC(R) Rules, 1957 every recognized Stock Exchange is required to maintain and preserve the following books of accounts and documents for a period of five years:

I.

Minute books of the meetings of A. B. C. Members Governing body Any standing committee or committees of the governing body or of the general body of members

II.

Register of members showing their full names and addresses. Where any member of the Stock Exchange is a firm, full names and addresses of all partners shall be mentioned.

III. IV. V. VI.

Register of authorized clerks. Register of remises or authorized assistants. Record of security deposits. Margin deposit book. 40

VII. VIII. IX. X.

Ledger. Journals. Cash Book. Bank Pass Book.

The Inspection Team may verify whether the Exchange has complied with the requirements of the above rule and check the said books.

41

MARKET OPERATION (MARGIN DEPARTMENT)

SEBI form time to time put in place various risk containment measures to address the risks involved in the cash and derivative market. In order to contain risk arising out of the transactions entered into by the members in various script either on their own account or on behalf of their clients the exchange has .Therefore adopted a well defined risk management tool by the way of margin, the Exchange accordingly impose margins on the members. Other highlights of the department are: Base Minimum capital is Rs. 400000 is required without this trading is not allowed. 50% is in liquid assets (cash & FDR). 50% in other liquid assets (share and mutual funds) Members are allowed trading on the amount deposited over and above BMC. As soon as the margin touches the margin point, the terminal automatically gets prohibited for trading. There are three types of Margin in Stock Exchange: Value at Risk. Mark to Market. Extreme Loss Margin.

All are calculated and applied on-line. Margins are calculated on daily basis. M2M Loss is deducted from the deposits of members. Formula:Liquid assets M2M =Surplus Liquid Surplus Liquid-VAR ELM=Surplus. 42

OVERVIEW: The core of the risk management system is a Liquid Asset, deposited by the members with the Exchange/Clearing Corporation. These liquid assets shall cover the following four requirements/risks:

M2M LOSSES: - Mark to Market losses is on outstanding settlement obligation of the matter. VaR: - VaR margin is to cover potential losses for 99% of the days. ELM Margin: - Margin to cover the expected losses in situation that lie outside the coverage of VaR Margin.

M2M LOSSES: - M2M Losses shall be collected in following manner: The stock exchange shall collect M2M Margin from member/broker before the start of the trading day. The M2M Margin shall be collected/adjusted from/against the cash/equivalent component of the liquid net worth deposited with the Exchange. The M2M Margin shall be collected on the gross open position of the members. The gross open position for this purpose would mean the gross of all next position across all the clients of the members including his proprietor position. The margin so collected shall be also with the pay in including early pay-in of securities

VaR Margin: - Computation The VaR Margin is the margin intended to cover the large loss that can be encountered on 99% of the days (99% value at risk). For liquid stocks the margin covers one day losses while for 43

liquid stocks it covers three days losses so as to allow clearing corporation to liquidate the position over three days. This leads to a scaling factor of square root of three for liquid stocks. For liquid stocks, the VaR Margins are also based on the volatility of the stock while for other stock; the volatility of the market index is also used for computation. Computation of VaR Margin includes following terminologies:SCRIP SIGMA: - Scrip sigma means the volatility of the security computed as at the end of the previous day. The computation usage the exponentially weighted moving average manner as in the derivative market. SCRIP VaR: - Scrip VaR means the highest of 7.5% or 3.5% scrip sigma. INDEX SIGMA: - Index sigma means the daily volatility of the market index (S&P CNX NIFTY OR BSE SENSEX) computed as on the ending of the previous trading day. The computation usage the exponentially weighted average moving method applied to daily returns in the same manner as in derivative method.

INDEX VaR: - The highest of 5% or 3% of the higher of the Sensex VaR of Nifty VaR would be used for this purpose. The VaR Margins are specified as follows for different group of stock:-

44

LIQUIDITY CATERGORISATION Liquid Security (Group 1st) Less Liquid Securities (group 2nd)

ONE DAY VaR

SCALING FACTOR FOR LIQUIDITY

VaR Margin

Scrip VaR

1.00

Scrip VaR

Higher of scrip VaR and three times of Index VaR

1.73(Square root of 3)

Higher of 1.73 times scrip VaR and 5.20 times Index VaR

Ill Liquid Securities (group 3rd)

Five times Index VaR

1.73

8.66 times Index VaR

Collection of VaR Margin: The VaR Margin shall be collected on an upfront basis by adjusting against the total liquid assets of the member at the time of trade collection of T+1 day is not acceptable. The VaR Margin shall be collected on the gross open position of the Member. The Gross open position for this purpose would mean the gross of all net position across all the clients of a member including his proprietary position. For the purpose there would. The VaR margin so collected shall be released along with the pay in including early payion of securities.

EXTREME LOSS MARGIN:45

 It covers the expected loss in situation that go beyond those envisaged in the 99% VaR estimated used in VaR margin. The ELM for any stock shall be higher of 5% or 1.5% times the Standard Deviation of daily logarithms return s of the stock price in the last six months. The computation shall be done at the end of month by taking the price data on a rolling basis of past six months and the resulting value shall be applicable for the next month. The ELM shall be collected/ adjusted against the total liquid assets of the member on a real time basis. The ELM shall be collected on the gross open position of the member. The gross open position would be same as mentioned above. The ELM so collected shall be release along with pay-in.

BASE MINIMUM CAPITAL:-

The Stock Exchange shall have the BMC requirement as provided below:-

BSE, NSE & CSE

Rs. 10 lakh.

Ahemdabad stock exchange & DSE

Rs. 7 lakh.

Other Stock exchanges.

Rs.4 lakh

46

Provided that the Stock Exchange shall maintain the BMC at Rs.1 lakh of the average daily turnover is less than Rs 1 crore for any three consecutive months.

BASE MINIMUM CAPITAL CAN BE EXPLAINED IN DETAIL:

Point no. 8 (1 ) SEBI Points Minimum Base Capital of the Exchange( Adjustable & Non Adjustable Capital ) 8(2) Composition of BMC Exchanges Reply Non Adjustable Capital required for all risk other than market risk ( for example operation risk and client claims ) Rs. 50,000.00 12.50% Rs. 1,50,000.00 37.50% Rs. 2,00,000.00 50.00% Cash Cash/FDR Cash/FDR Approved Securities 8(3) 8(4) Minimum Period of validity Fixed Deposit. Procedure for continual monitoring expiry of BG and FDs 2 / 3 years Month wise reviewing the FDRs and necessary notices issued to the concerned members in advance for renewal and also sending the FDRs to the Bank for renewal.

At present there is no BG deposited in 47

8(5)

Institutions whose FDs/ BGs are accepted

the Market Operation Department. FDR accepted of all scheduled banks and Standard Chartered Bank, Vysya Bank Yes. Daily basis Yes. Fire proof Almirah and details of Backup of Securities is kept in Bank Lockers. Demat securities are pledged with Stock

8(6) 8(7) 8(8) 8(9)

Securities accepted towards the BMC Methodology & Frequency for valuation of Securities Whether Securities Pledged in favor of the Exchange. Safe custody of Securities (Custodian of the Exchange)

8 (10 )

Action taken if BMC falls below minimum prescribed.

Holding Corporation of India Ltd. The trading terminal of the concerned member is deactivated automatically and efforts for the recovery of BMC are

8 (11 )

Process of replenishment of the shortfall in BMC

being made continuously. Requiring the members concerned to complete the BMC through notice or telephonic mode and till completion of BMC the trading terminal of the concerned member will remain

8 ( 12 )

Action taken by the Exchange against member for non

deactivated. As stated above

8 ( 13 )

replenishment of shortfall. Process of calculation of Free

50 % of Liquid Assets and 50% of 48

8 ( 14 )

Capital. Process to replace existing collaterals of the banks from whom the collaterals were being discontinued to be accepted by the

other liquid Nil

8 ( 15 )

Exchange ( if any ) Note on Additional BMC requirement of the Exchange which includes the following among other things : Composition, Procedure of continual monitoring 50 % of Liquid Assets and 50% of other liquid Withdrawal of Additional Capital, Manner and timing of collection. Period of lock-in. Procedure of release of Additional As per members request releasing the excess Additional Capital.

8 ( 16 ) 8 ( 17 )

Capital. Please provide a note on the inter segment transfer of BMC. Please provide note on BMC requirements in case of composite

Not Transferable. N.A.

8 (18 )

members : Please provide the details with respect composition of BMC and AC in the following format for the

As per details given below

49

above given sample dated 22.10.2008

50

LEGAL DEPARTMENT

Legal Department is one of the key departments of any organization as Law has to maintain certain compliances to maintain law and order. Stock Exchange has a legal department that deals with the legal matters. Legal department consists of a panel of legal experts who are legal representative of UPSE and take cares of its legal requirements. The main function of the department is to protect investors interest and to solve their grievances. However, grievance is tried to sort out at initials stage by Grievance Department working under Membership Department. If judgment is not satisfactory, an Arbitrator is appointed. If still Member is not satisfied and further appeal is in court against Stock Exchange , Legal Department comes into action as representative of UPSE and pleased on behalf of UPSE. The cases mainly related to: Cases filed against the members for bad delivers. Cases filed as an appeal in the District Court and then in High Court. Cases filed by the members and non members against any order passed by the Exchange. In cases any broker / member declared as defaulter. The legal department gives advice to various departments on legal matters when required. Whenever there is a proposed change in byelaws of exchange, the legal department takes proper steps for incorporation of such changes. Co ordination with other departments of the Exchange for implementation of various sebi circulars. Compiling and forwarding the pre inspection reports. 51

Compiling and forwarding the compliance report on the SEBI inspection report (conducted every year).

The section also fulfills all statutory requirements under Companies Act like:Preparation of board meetings Notice, agenda and minutes. Preparation of Notice calling AGM & EGM. To handle all the company related affairs under companies a ct.

Similar works relating to UPSE Securities ltd. (a wholly subsidiary of UPSE Assoc. Ltd.) are also handled by the section.

52

CLEARING DEPARTMENT

Clearing House is one of the important department of Uttar Pradesh Stock Exchange as it looks after the pay in and pay out of funds and shares .It acts as an effective mediator between the brokers of the exchange and investors who want to purchase or sell the securities .Clearing House helps the stock exchange in providing the facilities of sales and purchases of shares to the client through their brokers ,and enabling the trading settlement as per the rules and regulations prescribed by the SEBI .In stock exchange nobody can sell or purchase securities directly, therefore clearing house makes an adjustment in transactions taking place and helps in evaluating the total sales and purchases of the stock exchange. Presently rolling settlement T+2 are applicable in the exchange .The settlement takes place as:

Timing Start Time Beginning of day Pre-open Session 9.42 9.50 9.35 9.42 End Time Remarks, if any All the application servers start in this session, but broker cannot login in this session. Members can login in this session and place limit orders (i.e., orders with price) only. The orders are not matched during this session Activity Involved in this session

53

Opening Session

9.50

9.55

During this session, the members could stay logged on but cannot put orders. During this session, opening price for each scrip is computed, based on the price which maximized trading volume i.e. price at which maximum trades can be executed based on the orders placed during pre-open session. In case there are not trades matched the previous days close price becomes the current days opening price.

Trading Session Closing Session

9.55

3.30

Normal trading session. Members can place orders and do trading.

3.30

3.40

System is not available for use. Closing price for each scrip is computed based on weighted average of last half an hour trades in particular scrip. In case there is no trade during the last half an hour, the average of last five trades is taken for arriving at closing price.

Post Closing Session End of day Session Break

3.40

3.55

Only Broker can login and allowed to do client code rectifications only.

3.55

Members can download their trades.

54

No session

Session Odd-Lot Session Spot session Auction Session 1.30 2.30 During this session only solicitor members (members other than member who failed to give delivery) can place orders. The solicitor orders once placed cannot be cancelled. Modification of orders is only allowed to the extent of bettering the price or increasing the qty. No Trading 9.56 3.28 No Trading

When an investor sell their securities then it is necessary to deposit their shares and securities in the exchange's account in case of sale and in case of purchase the amount is paid to the exchange by the investor through their broker. If any broker / client fail to deposit their shares in the exchange up to the time of pay in of securities then those shares would be treated as shortage or short delivery. In case of short delivery shortage is recovered by on-line auction on T+2 day. If securities are not available in the on-line auction on T+2 day within the prescribed price limit then the transaction is closed out as per the rules and norms of the exchange. At the time of auction of short delivery the loss is borne by the defaulter broker and if profit is earned by auction then that profit is deposited in Investor Protection Endowment Fund 55

account of the exchange .On T+3 day the settlement of auction delivery is done, therefore clearing house plays a significant role in the trading of shares/securities.

A BRIEF NOTE ON AUCTIONS & CLOSE OUT CARRIED OUT AT EXCHANGE

If securities are not available in online auction on T + 2 day within the prescribed price limit (i.e. 25% of the current market rate), then the transaction is closed out as per the standard procedures specified by SEBI. The close out price will be the highest price recorded in that scrip on the exchange in the settlement in which the concerned contract was entered into and up to the date of auction / close out.

OR
20% above the official close price on which auction offers are called for ( and in the event of there being no such closing price on that day , then the official closing price on the immediately preceding trading day on which there was an official closing price).

WHICHEVER IS HIGHER
Since in the rolling settlement the auction and the close outtakes place during trading hours hence the reference price in the rolling settlement for the close out procedure would be taken as the latest available closing price at the exchange.

As per SEBI letter no.SMD / POLICY / CIR- 08 / 2002 dated 16th April 2002 that in cases of close out to the extent of short delivery if the shares cannot be acquired in auction or cum basis then the 56

mark up price would be 10% instead of 20%

DEACTIVATION OF TRADING TERMINAL AND IMPOSITION OF PENALTY

In case of any default by a members regarding timely pay in of the fund trading terminals of the concerned members is being deactivated and penalty is also being imposed upon the concerned members as prescribed by the exchange from time to time. On the receipt of complete amount of the pay-in and penalty imposed the trading terminal of the concerned member is being reactivated.

SURVEILLANCE DEPARTMENT

One of the objectives of the exchange is to promote and inculcate honorable and just practices of trade in securities transactions and to discourage malpractice. the surveillance function at the

57

exchange has assumed greater importance over the years .SEBI has directed the exchange in August 1995 to set up a surveillance department with staff exclusively assigned to surveillance department to keep a close watch on price movements of scrip, detect market manipulations like price rigging etc, monitor abnormal price and volumes which are not consistent with normal trading pattern and keep a watch on the exposure of members .the surveillance department performs the following function:

1. RISK MANAGEMENT: - The Risk Management system has improved in the recent past because of positive steps taken by the exchange in terms of prescribing capital adequacy norms for members, margins, on-line surveillance and inspection of broker's books. The Margin system has become more sophisticated to consider the factors of volatility volumes and other factors. The Margins are required to be compulsorily collected from the client by the brokers. A Quarterly certificate has been prescribed for compliance of margin system with the infrastructure of risk management enhanced. The Stock Exchange as well as investors would be better protected towards risk of various scams that had shaken the market. The various Margins collected by the Exchange are:.Mark to market margin .Value at risk margin .Extreme loss margin

2. PRICE MANIPULATION:-The functions of price monitoring and investigation have been entrusted to the surveillance department, where large variation in the prices as well as scrip is scrutinized and appropriate actions are taken. The scrip which reaches new high or new low and

58

companies which have high turnover are watched. Also the prices and volumes in the newly introduced scrip are monitored. Detailed investigations are conducted in the cases where price manipulation is suspected and disciplinary actions are taken against the members concerned.

3. INSIDER TRADING:-The most important function of this department is to prohibit insider trading .Insider Trading denotes dealing in a company's security on the basis of confidential information related to the company .It generally means trading in shares of a company by a person who is in the management of the company or are close to them on the basis of undisclosed price sensitive information regarding the working of the company that they know but is not available to others.

4. MEDIA ALERT:-This is also an important function, before the company information gets printed in newspapers; they have to be verified by the department. This is necessary in order to find out whether company is concealing any material facts.

5. OTHER MANIPULATIONS:-Other manipulations like carry forward trading are also taken care of.

PURPOSE OF SURVEILLANCE
Purpose of surveillance is to prevent risk which may arise due to: Carry forward trade Trade away from market price Price manipulation 59

Insider trading Circular trading Creating false market In order to detect abnormal behavior / movement it is necessary to know the normal market behavior. The necessary actions are initiated like imposition of special margin , suspension and deactivation of terminals etc. to control abnormal market behavior the department carries out investigation , if necessary , based on preliminary examination Analysis and suitable actions are taken against members involved based on investigation. The detailed activities are as follows:

ONLINE SURVELLIANCE: one of the most important tools of surveillance is the

online real time surveillance system with main objective of detecting potential market abuses at a necessary stage to reduce the ability of the market participants. To unduly influence the price and volume of the scripts traded at the exchange, improve the risk management system and strengthen the self regulatory mechanism at the exchange the system has a facility to generate the alerts online based on certain preset parameters like prices and volume variations in scripts, members crossing intraday limits or gross exposure limits.

OFFSHORE SURVEILLANCE: the offshore surveillance system comprises of various

reports based on different parameters and securities thereof: High / low difference in price 60

% change in prices over a week / fortnight / month. Top scripts by turnover Scripts hitting new high / low etc

The surveillance actions or investigations are initiated in the scripts identified from the above stated reports.

R&D DEPARTMENT
R&D Department performs three works: Assistance to investors by Investors cell service. Maintains library. Provides stationary. 61

 Conduct research and development.

INVESTOR SERVICE CELL:This wing has been functioning since 1992 under SEBI directors & providing valuable services to investors. Investor service Cell has been made to help (potential) investors in many ways. Whether its about their queries of stock market or solving their investment problem. The assist them in their queries of stock market and solving their investment problems. The cell assist them in technical matters that consist of legal provision/procedure that secures their interest .Besides , cell works to aware investors about their rights and duties. INVESTA is an endeavor in this direction by SEBI. SEBI has designated different Stock Exchanges to arrange INVESTA zone wise. UPSE has been designated 176 places in UP and UTTARANCHAL for cause. The program also makes investors aware about the precaution to be taken while investing and investment decision is left on investors direction. The whole account of INVESTA is given by R&D Dept. to Finance dept. and to management of stock Exchange. All expenses are borne by SEBI for this sake a separate fund Investor Protection Fund is maintained. RECORDS TO BE MAINTAINED BY INVESTA:This is the duty of R&D dept. to maintain the necessary records of INVESTA because the same has to be submitted to the SEBI. The various records which are to be maintained by R&D dept. for INVESTA are: Schedule for monthly program to be approved by the administration. Attendance registers for INVESTA. Monthly statement of Program conducted. 62

OTHER SERVICES: UPSE has set up UPSE & BSE Terminals for investors to enable them to know the quote of various scrip listed on that. Information regarding change of names of companies, mergers of companies, e-merger of companies is made available. Address of companies is can be known from here. IPOs forms of various companies are available. A view terminal has been provided on which the investors can watch CNBC, ZEE BUSINESS, NDTV PROFIT and other business news channels. If the investors have queries regarding any member, he can contact the Investor Service Committee, formed for this purpose.

LIBRARY AND STATIONARY:Departments maintains a rich library of various Acts , Laws ,Amendments, Articles regarding Capita Market like SEBI manual, Income Tax Act, Companies Act, Listing Agreements and the latest changes done by SEBI. Departments also subscribe various books, magazines and newspaper regularly, like The Times Of India, Economics Times, Business Standard, The Financial Express, Business Line and all the other leading newspaper and Magazines like Dalal Street, Capital Market and various magazines are available for members/ investors.BSE quotations regarding book closure, dividend etc and financial reports of companies are also made available for their knowledge sake.

63

Department also deals with Stationary cell. Share transfer deeds, challans, receipt books Bye laws etc. are sold on No profit No loss basis. The cell regularly maintains the stationary records (sale, purchase and stock) that is sent to and approved by the Accounts Department.

64

WORKING OF LISTING DEPARTMENT

This department deals with all the work relating to the listing of securities. The company which is not listed on the stock exchange should adopt a request letter of application for the enlistment of its securities therein. The company must apply for listing of the share in the prescribed application form within 10 days of the filling of prospectus with the registrar of companies along with certain documents. i.e. Memorandum and Article of Association Debenture Trust deed Prospectus Underwriting agreement Particulars of dividend, arrear of dividend Director report, balance sheet for last 10 years Short history of the company etc.

The company desirous of listing has to execute with the exchange a detailed agreement in the prescribed form. The listed company which need further issue. Does applies on other prescribed letter of application and supporting documents, there are four steps in the listing procedure. Application company communicates to the stock exchange Preparation and printing of formal application Investigation of committee of thaw board of directors

65

LISTING OF SECURITIES WITH STOCK EXCHANGE

Meaning of listing Listing means admission of the security of a public limited company on a recognized stock exchange which provides a forum for the purchase and sale of securities.

Prior to the promulgation of companies (Amendment) act.1988 listing of securities offered to the public for subscription was not compulsory. Companies were free either to enlist or not to do so at their discretion. But Section 73 (before amendment) provides that if the prospectus of an Issue contains a provision that the securities arising out of the Issue will be listed on the Stock Exchanges, it has to do so and failure of which may result in the refund if applications money collected. Thus listing was not mandatory. Nevertheless companies generally prefer to enlist their securities for envious reasons. But listing was not made within a reasonable time.

Having regard to undesirable activities and in order to protect the interest of the investors, a sub-section was introduced into Section 73 of the companies act 1988. This sub-section provided for the compulsory listing of all issue of securities offered to the public for subscription at one or more Stock Exchangs.

Further, according to the listing requirements of the stock exchange provide that, if the issue amount exceeds 3 crores the company has to make arrangements to enlist the securities in one or more Stock Exchanges, apart from the Regional Stock Exchange.

66

SECTIONH 73 Explained: According to section-73, every Company intending to offer Shares or Debentures to the public for subscription by the Issue of a Prospectus shall before such issue make an application to one or more recognized Stock Exchanges for permission Share and Debentures intending to be offered to be dealt with in the Stock Exchange.

If a Prospectus starts that an application has been made for permission for the Shares and Debentures offered thereby to be dealt in one or more Stock Exchange, then any allotment made on any application shall be void, if the permission by the Stock Exchange is not granted before the expiry in 30 days from the date of closure of Subscription Lists. The entire application money collected shall be refunded without interest within 8 days after the Company becomes liable to repay it.

The money standing to the credit of such separate bank account shall not be utilized for any purpose, other than the following: a) Adjustment against allotment of shares, where the shares have been permitted to be dealt on the Stock Exchanges Or b) Repayment of money received from the applicants, where applications have not been granted by the Stock Exchange. By reading the opening words of this section it seems that the provisions contained there in not applicable for the following issues:

67

(a) Issues made otherwise than through a Prospectus. (b) (b) Issues of other instruments, which do not tantamount to the issue of Capital.

For example, if a company issue only Warrants or Coupons. It will not be hit by the provision of Section 73 as they do not involve any issue of Capital. Presently, this initial application has to be submitted to the concerned stock exchange before filing of the prospectus with the ROC who may insist for these Acknowledgements.

Advantages of Listing
Listing of securities has certain advantages which can be summarized as follows: 1) The investors get periodic reports of the listed companies which help them to know the performance of the company. Following the recommendations of the High Powered Committee on Stock Exchange Reforms the Government vides guideline no. F/14/2/SE/85 dated September 27, 1985has made it obligatory for all listed companies to submit unedited financial results on a half-yearly basis within 2 months of the expiry of that half year. 2) The transactions of listed companies are reported in daily newspapers and the investing public gets regular information about the worth of the securities. 3) Listing ensures liquidity to the investing public and free transferability of securities. More so after incorporation of Section 22A in the Securities Contract (Regulation) Act, free transfer of shares has been ensured.

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4) The listed companies are treated as widely held companies get wide publicity and thus get an opportunity for further issue of securities once they consider that their worth will attract the public for subscription.

Disadvantages of Listing:
1) Once the Shares are listed, the Company subjects themselves to various regulatory measures of Stock Exchanges and SEBI. 2) Listed companies must submit notices and disclose vital information to the Stock Exchanges 3) The Company has to send notices of Annual General Meeting, (AGM) Annual Reports etc., to a large no. of shareholders, resulting in unnecessary expenditure. 4) Companies have to spend heavily in the process of placing the Securities with the Public

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QUALIFYING CRITERIA FOR LISTING

Before going for the listing of securities there are certain minimum requirements which a company has to comply with before its securities can qualify for listing on a recognized Stock Exchange. These are:

a) Minimum issued capital:

As per requirements of Guidelines No. F1/38/SE/78 dated November 2, 1982 as amended wide Guideline No. F14/2/SE/85 dated September 23, 1985, f. No. 1/1/SE/88 dated 24th February, 1988 and F.No. 1/ISE/88 dated 15th February 1989 the minimum issued equity capital of a company must be above Rs. 3 Crore, NSE Rs. 10 Crore & 25 lakh for UPSE.

b) Payment of interest on excess application money:

The Government vide Guideline No. F/86/SE/85 dated July 21, 1983 as amended vides guideline no. F14/2/SE/85 dated September 27, 1985 has made payment of interest obligatory at the rate of 15 % on excess application money for the delayed period beyond 30 days from the date of closure of the subscription list.

c) Listing on multiple exchanges:

When paid up capital of the company is above Rs. 5 crores it is obligatory for the company to seek listing on more than one Stock Exchange

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d) Of large holdings The number of shareholders:

To ensure wide distribution of shares among the general public and to prevent undue concentration of large holdings with the company, minimum number of shareholders are prescribed. For every Rs. 1 lakh of fresh issue of capital, there should be at least 10 shareholders. In the case of sale of existing capital of Rs. 1 lakh, it should ensure at least 20 shareholders. If the number of shareholders falls below the prescribed number, then the concerned companys security would be delisted

e) Appointment of market maker

A company where the paid up capital is Rs 3 Crore but not more than Rs. 5 Crore and having a commercial operation for less than 2 years should appoint a market maker. The market maker should provide two way quotes for the concerned stock for a minimum period of 18 months from the date of trading on stock exchange. The difference between quotations for the sale and purchase bid, ask spreader should not exceed 10 %. The market maker should have an inventory of 5 of the post issue capital as on the date of allotment.

f) Articles of association
The articles of association of the company should be in tune with the sound corporate price. If veto power has been provided to a director or a class of directors to over rule the majority decision, the security of the company is not qualified for listing.

g) Cost of public issue

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To be listed the company should adhere to the ceiling in the expenditure of public issue as prescribed by the SEBI

h) Advertisement
The company should not advertise in newspapers that issue over subscribed or thanks o the investing public for their overwhelming response, etc during the subscription period. If the company gives such an advertisement, listing will be refused by the stock exchange after intimation to the stock exchange division of the Ministry of Finance.

i) Minimum subscription
A minimum of Rs.5, 000 (500 shares of Rs 10 each) subscription has been fixed by SEBI. But, due to the slackness in the primary market, it is reduced to Rs 2000 of 200 shares of Rs 10 each. This should be given in the prospectus.

j) Applying mode
The prospectus should provide information on how the investor should apply. It should clearly state that the application must be made in the prescribed form stating the number of shares applied for. It should be applied in single name or joint names of not more than three. Application can be made in the name of limited companies, corporations or institutions and not in the name of a trust firm or partnership. The name should be given in block letters in English. An individual can make only one application.

k) Public offer size

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The size of the public offer and value of the share should be stated in the first page of the prospectus. If the shares are issued at premium, that also should be stated. Preferential allotment to the directors and workers of the company and the reservation for allotment to the non-resident Indians should be indicated clearly on the prospectus.

Listing procedure
Obtaining the listing permission from stock exchanges involves various steps. The steps are as follows:

Preliminary discussion
The company desirous of getting its security listed on the stock exchange authorities. The discussion enables it to understand the various compliances to be compiled with for listing its securities.

Article of association approval

The article of association will be approved only if it fulfills certain requirements. They are:

1) Common form of transfer should be used

2) Once the shares are fully paid, they should be free from all liens and in the case of partly paid shares the companys lien is restricted to the call money alone.

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3) The calls carried out in advance are entitled to interest rate but not for dividends or any other declared profits.

4) The free dealings in companys shares should not be restricted by any provision.

5) The company should comply with the section 205-A of Companies Act in the case of dividends.

If the company is not able to comply with any of the requirements of the Rule 19(2) (a) of the Securities Contract Regulation Act, the company should give an undertaking to make necessary amendments in the articles of association as required in the next Annual General Meeting of the Company. On the basis of the undertaking, the security will be permitted to trade on the stock exchanges. If the article of association provides veto powers to any director/ or group of directors, the relevant article should be amended to remove such powers to get the security listed.

Draft prospectus approval

Getting approval for the draft prospectus is the essential pre-requisite for the security to be listed. Before finalizing the draft prospectus the company authority should hold a discussion with the stock exchange authorities. While seeking approval, the prospectus should contain all the conditions put by the stock exchange. The prospectus should clearly state the following:

1) The name of regional stock exchange and any other stock exchange(s) where it intends to enlist its securities.

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2) It should specify the date of commencement of the subscription and the date of closing of subscription. It is essential to keep the subscription list open for a minimum period of three working days. It may extend up to 10 working days at the discretion of the Board of Directors. The date of closure of subscription list should be notified to the stock exchange where listing is sought.

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Listing application

Any company when it intends to offer shares to the public through prospectus, should make an application to the stock exchange or exchanges where the share is to be listed. A formal application form should be filed before filing the prospectus with the Registrar of the Companies. A number of certificates have to be submitted with the application. They are listed below

1) Three certified companies of memorandum and articles of association and debentures trust deed.

2) Copies of prospectus, offer for sale made during the last five years and circulars and advertisement regarding the offer made during the last five years.

3) Copy of every letter, report, balance sheet, valuation, contract, court order or any other document that is given in the prospectus.

4) Certified copies of underwriting, brokerage, vendors, promoters selling agents and sales managers agreement.

5) Certified copies of the service agreement of secretaries, treasures, managing director, technical directors, general manager and manager.

6) Particulars regarding the material contract, technical advice and collaboration, concessions and similar other documents. 76

7) Copies of agreements with the Industrial Finance Corporation, Industrial Credit and Investment Corporation and such other bodies.

8) Details regarding the reorganization, reconstruction, amalgamation and details of the companies activities.

9) Specimen copies of the share certificate, debenture certificate, letters of allotment, letters of acceptance, letters of renunciation, transfer receipts and renewal receipts.

The above mentioned documents are ordinarily required by the listing application. But sometime additional documents also may be called for.

The stock exchange generally acknowledges the receipt of the application and gives instruction regarding various other formalities to be fulfilled before getting the listing permission. Once the subscription list is closed, the process of allotment should be closed within 30 days of the closure. Originally it was 10 weeks from the closure of the subscription list. The allocation of shares should be intimated to the stock exchange concerned.

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LISTING AGREEMENT REGARDING PROJECTION OF PROFITABILITY

Generally companies make projections regarding the profitability of the company at the time of issue of capital and give an abridged statement of the balance sheet and profit and loss account. Many times the projections are not met with. To provide protection to the investors, SEBI amended the listing agreement by inserting a new clause 43. Accordingly the company has to submit yearly statement showing the variation between projections given in the prospectus and the actual should be given. If the projections are provided for five years, the company has to furnish explanation for the unattained projected figures for all the five years. This information also should be published in the news paper. The listed company has to give a copy of the complete and full balance sheet, profit & loss a/c, and the directors report to each shareholder.

LISTING AGREEMENT AND CASH FLOW STATEMENT

The representative of SEBI, The Stock Exchange of Mumbai, Calcutta, Delhi, Ahemdabad, National Stock Exchange and The institute of Chartered Accountant of India framed the norms for the inclusion cash flow statement in the annual reports. The cash flow statement discloses the actual cash flow operations in the company. This would provide better quality information to the shareholders. To comply with the international standards this has been imposed as a part of listing agreement. The company has to provide the cash flow statement along with the balance sheet profit & loss a/c. The cash flow statement has to be prepared according to the instructions given by the SEBI.

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The cash flow statement helps the shareholders to analyze the pattern of resources deployed and evaluate the changes in net asset of a company. It helps to assess the ability of the company to generate cash and cash equivalents. Briefly, it is useful top the shareholders to assess the liquidity, viability and financial adaptability of the company.

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FPO FACT SHEET

(to be completed wherever applicable and be submitted along with the offer document. Incomplete Fact Sheet will not be accepted) Name of Company Regd. Office Address Corporate Office Address Phone Numbers Email ID Change of Name, if any (with dates of such changes and reasons thereof)

Issue Details
Book Building/ Fixed Price Instrument For Fixed Price Issues: Face Value Premium No. of Shares Offered through FPO Issue Amount( Rs.million) (for book built issues, tick the appropriate box below) <500 500-999 1000 2499 2500-4999 50009999 24999 >25000 Presently Listed at Listing Proposed at Designated Stock Exchange If Rated, Details of Ratings

10000-

If Offer for Sale

Names of Selling Shareholders Key Intermediaries Lead Managers Appraised By Monitoring Agency Registrars Number of Shares prior to the Issue Number of Shares being Sold

Issue Objects
Objects of the Issue Details Of Project Cost Means Of Financing Proposed Utilization of Issue Funds pending Deployment)

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Promoters
Promoters Background

LISTING FEE
The Stock Exchange charges a fee from the company for permitting the companys scrip to be traded. The listing fee varies from major stock exchanges to regional stock exchanges. The fees charged by the regional stock exchanges are comparatively less than the Major stock Exchanges. The fee also differs according to the equity base of the company. The following table gives the listing fee charged by the Uttar Pradesh Stock Exchange

PARTICULARS
1) Initial Listing Fees 2) Annual Listing Fees a) Companies with paid-up share and/or debenture capital of Rs 1 Cr b) Above Rs 1 Cr and up to Rs 5 Cr c) Above Rs 5 Cr and up to Rs 10 crore d) Above Rs 10 Cr and up to Rs 20 Cr

AMOUNT Rs
10,500

6000 9000 14,000 28,000

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Companies which have a paid-up capital of more than Rs 20 crore will pay additional Listing fees of Rs 600. For every increase of Rs 1 Cr or part there of their in the paid up share/ debenture capital.

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GENERAL INSTRUCTIONS FOR FILLING UP THE APPLICATION FORM FOR IN-PRINCIPLE APPROVAL PRIOR TO ISSUE AND ALLOTMENT OF SECURITIES ON PREFERENTIAL BASIS:
1. The application forms should be submitted duly completed in all respects and all details asked for in the forms should be filled. 2. Each page of the Application along-with the supporting documents should be initialed by the authorized signatory and affixed with the seal of the company. 3. The pricing certificate detailing computation of issue price should be as per the format given in Annexure A.

4. Company should submit the application, complete in all respects including all the
relevant enclosures, within 10 days of the Board Meeting where the proposal for the preferential issue was considered and approved, to enable the company to comply with Regulation 74 (1) of Chapter VII of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009. Only applications complete in all respects including information/ supporting documents will be taken up for processing. 5. If a particular field / detail in the application form are not applicable, please mention NA against the said field. 6. The Exchange reserves the right to ask for documents other than those mentioned in the application form. 7. If the space provided in the Application form is insufficient, the company may attach separate certificates providing the details for the same along-with the Application form.

8. Non-refundable processing fees of Rs.55, 150/- (Rs.50, 000/- plus service tax @ 10.3%)
to be submitted.

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Companys Business

Brief History of the Company Present Business Proposed Business Market Collaborations/TieUps, if any

Board of Directors
Name Fathers/ Spouses Name Designation in Board (Indicate Independent Directors specifically) Age, Nationality, Occupation Residence Address Other Directorships

Shareholding Pattern
I .Controlling/Strategic/In-Concert Holdings
BASED IN INDIA Indian Individuals & their Relatives/HUFs Indian Corporate Bodies/ Trusts/ Partnerships Persons Acting in Concert Non-promoter Directors and their Relatives (other than those covered above) Employee Welfare Trusts/ESOPs Banks/Financial Institutions Central/ State Governments/Institutions Venture Funds/ Private Equity Funds Others (Please specify here______________________) Sub Total BASED OVERSEAS Foreign Individuals/Corporate Bodies (including FDI) Foreign Banks/Financial Institutions Non Resident Indians/Corporate Bodies Others (Please specify here______________________)

Pre-Issue No. of Shares %

Likely Post Issue No. of Shares %

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Sub Total Total I

II. Free Float/Public Holdings

BASED IN INDIA Indian Individuals/HUFs Indian Corporate Bodies/Trusts/Partnerships Present Employees Banks/Financial Institutions Central/State Governments/Institutions Insurance Companies Mutual Funds Venture Funds/ Private Equity Funds Others (Please specify here______________________) Sub Total BASED OVERSEAS Foreign Individuals/Corporate Bodies Foreign Institutional Investors Non Resident Indians/Corporate Bodies Others (Please specify here______________________) Sub Total Total II Grand Total (I & II)

Key Financial Indicators for Last 5 Years Profit & Loss Account Year I Year II ( ) ( ) Sales/ Revenue Other Income Total Income Total Expenditure Net Profit before Tax Net profit after Tax Adjusted Net Profit after Tax

Year III ( )

(Rs.million) Year IV Year V ( ) ( )

Assets & Liabilities

Total Fixed Assets(Net Block) Investments Total Current Assets, Loans & Advances Total Liabilities

Performance Ratios
Earnings per Share (Rs) 85

Return on Net worth (%) Book Value per Share(Rs) D. Net worth E. Segment Revenues Net worth (Rs million) Pre-Issue(as on _______) Post Issue

Top 10 Sundry Debtors As on the immediate period preceding the filing of the offer document (specify as on date here _______) Name Address Relationship with Amount ,% of Period Company/ Promoters/ (Rs. Total Outstanding Directors million) Top 10 Customers in the preceding 3 Financial Years Name Address Relationship with Company/ Promoters/ Directors Amount (Rs. million) ,% of Total Period Outstanding

Top 10 Sundry Creditors As on the immediate period preceding the filing of the offer document (specify as on date here _______) Name Address Relationship with Amount ,% of Period Company/ Promoters/ (Rs. Total Outstanding Directors million) Investments made by the Company As on the immediate period preceding the filing of the offer document (specify as on date here _______) Name Amount (Rs. million) Capital Issues made by the Company and Group Companies in last 5 Years (From the date of filing of the Offer Document) Name of Company Issue Type Issue Date Amount Raised (E.g. public/rights etc.) (Rs. million)

Status of Income Tax

Of Company, its promoters and all directors, for preceding 5 assessment years (and of such past years where assessment has not been completed) Assessment Year Income Tax Amount Status of Assessment

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Risk Factors
CompanySpecific Risk Factors (do not reproduce from the prospectus all risk factors here; list only key company-specific risk factors) Other Issues Salient Features Of Outstanding & Proposed Secured & Unsecured Loans Government Regulations of Concern Details of any other Shareholders Agreements and Restrictive Clauses if any Ownership of Copyright/Trade Marks/Brands

Other Group Companies -Listed

(Required for each company separately) Name of Company Year Of Nature of Incorpor Activity ation Turnover PBT (Rs. million) (Rs. Year---million) Year---Dividend % Year---Listed at

Other Group Companies -Unlisted

(required for each company separately) Name of Company Year Of Nature of Activity Incorpor ation Turnover (Rs. million) Year---PBT (Rs. million) Year---Dividend % Year----

Defaults with Stock Exchanges/Regulators

Details, if any, if the company/promoters/ promoting company / group companies / subsidiary companies/ companies promoted by the promoters/ promoting company(ies) have been in default in payment of listing fees to any stock exchange in the last three years or have faced any disciplinary action or have been delisted or suspended in the past or have been proceeded against by SEBI or other regulatory authority

Defaults in Payment of Interest/Principal

Defaults by Company/Promoters/ promoting company / group company / subsidiary company/ companies promoted by the promoters/ promoting company(ies) in respect of payment of interest and/or principal to the debenture/ bond/ fixed deposit holders if any.

Compliances at Stock Exchanges

i) Confirmation that the company/group companies are fully compliant with the listing agreement at all stock exchanges where these are listed 87

ii) Confirmation that all instruments issued prior to this FPO ( and of other group companies) are listed

Stock Price ( at a major exchange where the company is presently listed)

Name of Stock Exchange: Date Price at the time of filing the Offer Document Price 1 month ago Price 3 months ago Price 6 months ago Price 12 months ago Closing Price Months Volume -

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Disciplinary Actions/Litigation/Defaults (include the following, whether in India or abroad) litigations /disputes; non-payment of statutory dues, overdues to banks/ financial institutions/ lenders, defaults against banks/ financial institutions/ lenders, defaults in dues payable to holders of debentures/ bonds/ fixed deposits/ preference shares(including willful default); defaults in compliance with statutory and listing regulations; non-payment of statutory dues; economic offences; cases of suspension/delisting or other disciplinary action taken by stock exchanges; cases of actions by Securities and Exchange Board of India(SEBI) , Department of Company Affairs (DCA) and other government organisations/bodies like Reserve Bank of India(RBI); cases relating to income tax and indirect taxes; other civil prosecutions (e.g. by suppliers, customers, employees etc); issues of moral turpitude or criminal culpability; winding up/ under liquidation/ sick company/ names strike off from Registrar of Companies(ROC); cases of investor grievances; any other cases where penalties were imposed. The disclosures should cover the following: all such cases of the past where conviction has taken place/adverse order has been issued all cases which are presently outstanding The entities for which these disclosures should be made should cover: issuer company directors promoters persons acting in concert companies and firms promoted by the promoters companies in which promoters were associated in the past as a promoter but are no longer associated subsidiaries and associates of the issuer company any other entity where outcome of a case could have a materially adverse effect on the issuer company key managerial personnel of the issuer company With regard to the items, the disclosures, wherever applicable, should cover brief description of the case, amounts involved, present status and likely adverse effect on the issuer company For brevity purposes, the grouping may be done for some types of negative information, which are large by number but small by amount even in the aggregate (like litigations by employees).

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The company should complete the Post-issue under mentioned formalities for listing of equity shares allotted on preferential basis
1. Certified copy of the shareholders resolution approving the allotment. 2. Certified copy of the Board resolution for allotment of shares. Where the allotment of shares is pursuant to conversion of convertible instrument, certified copy of the board resolution for allotment of convertible instrument should also be submitted. 3. Pre and post Shareholding pattern in clause 35 format.

4.
5.

The enclosed form of share holding pattern should be submitted duly filled in as per its format alongwith the relevant Annexure as stated therein (Pre & Post-Issue). Indicate the distinctive numbers of these shares allotted. 6. Additional Listing Fee (wherever applicable) on the enhanced capital alongwith service tax @ 10.3% on the same. 7. Non-refundable processing fee of Rs.55,150/- (Rs.50,000/- plus service tax @ 10.3%) payable by company as under Equity/ Convertible instruments If the same has not been paid at the time of obtaining in-principle approval. Further for second and subsequent conversion into equity, the same is payable for each conversion. If the same has been paid at the time of obtaining in-principle approval, then for second and subsequent conversion into equity, the same is payable for each conversion.

Convertible instruments

Please note that the said processing fee should be sent by a separate demand draft. 8. Certified copies of the Bank Statement in highlighting therein the deposit of application/allotment monies and indicating the name of the allottee against each entry.

9.

A certificate from the Statutory Auditors of the company should be submitted specifically certifying that the company has actually received the Application/Allotment Money aggregating to Rs._____________/- from the applicants of these equity shares against the allotment of __________equity shares on ___________ and there is no circulation of funds or mere passing of book entries in this regard. OR A certificate from the Statutory Auditors of the company (if applicable) should be submitted specifically certifying that the company has actually received on _______ the 25% upfront money amounted to Rs.________/- against the allotment of ______________ Warrants and further the company has also received 75% Application/Allotment Monies amounted to Rs.________/- against allotment of the aforesaid equity shares on conversion of these Warrants on _________ from the applicants of the aforesaid shares and there is no circulation of funds or mere passing of book entries in this regard. 10. A certificate from the Statutory Auditors/ Practicing Company Secretary certifying that

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a.

the company has complied with all the provisions of Chapter VII of SEBI (Issue of Capital and Disclosure Requirements)Regulations, 2009 and further the company has also complied with all the legal and statutory formalities

b. c.

no statutory authority has restrained the company for issuing ____________ equity shares to _______________ on preferential basis. the certificates of the shares issued on preferential basis have been stamped with an enfacement as under: These shares will not be sold/transferred/hypothecated ___________________ (1/3 years from the date of allotment) This certificate should be in the following proforma: Number of shares Distinctive Numbers Date up to which they are nontransferable until

11. A declaration from the Managing Director/Company Secretary of the company certifying that the documents filed by the company with the Exchange are same/similar/identical in all respect which have been filed by the company with Registrar of Companies/SEBI/Reserve Bank of India/FIPB in respect of the allotment of these shares issued on a preferential basis as well as enlistment of the aforesaid on the Exchange. 12. A certified true copy of the companys letter alongwith FC-GPR form filed with the Reserve Bank of India intimating about the allotment of equity shares to NRIs/FIIs/etc. should be submitted. Further the company is requested to submit a copy of the Foreign Inward Remittance Certificate for the monies received from NRIs and FIIs. (if applicable) 13. The company should submit the details of its Board of Directors in the enclosed format for updating the records of the Exchange. 14. The enclosed prescribed Listing Application Form should be submitted in respect of these shares.

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SHAREHOLDING DISCLOSURE FORMS

GUIDELINES FOR FILLING THE SHAREHOLDING DISCLOSURE FORMS

General Instructions
1. 2. 3. 4. 5. Information should be filled in the prescribed forms only. Information submitted in any other format shall not be accepted. Information should be filled in the columns provided and the column names should not be changed. All forms and all columns should be filled. A should be filled to show nil. The shareholding pattern must cover 100% of the shareholding. Data should not contain any calculation errors in sub- totals or in the grand total. Forfeited shares should not be included in the shareholding pattern. Forfeiture of shares leads to reduction of capital and as such the same should be excluded from the main format and can be disclosed by way of a footnote.

6. No shareholder should be included under 2 categories. For example, if a Bank has promoted a company and presently has controlling interest in the company, its shareholding should appear under Banks/ Financial Institution (IA6) and not under Indian Corporate Bodies/Trusts/Partnerships (IA2).

What is Controlling/ Strategic/In-concert Holding ? Holdings of founders/directors/ acquirers and their relatives which has a control element Holdings of persons/ bodies and by their relatives who are associated with entities whose holding has a control element. Holdings of such entities on which the Controlling Body has a managerial control or in which it has a significant investment (??) Holdings of such entities where the right of first refusal on shares rests with the Controlling Body Holdings of the Government as a promoter/acquirer Holdings under FDI and also such FII holdings where the parent is related to the FDI Strategic stakes ofcorporate bodies/ individuals Holdings of associate/group companies (cross-holdings) Holdings of Employee Welfare Trusts All locked-in shares

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Holdings of any entity which would not trade in the shares of the company without the advice or consent of the entities in control

If there is any shareholder who has a relationship (see note on What is Controlling/Strategic/InConcert holding above) with the holders of Controlling/ Strategic Interest, then its shareholding should not be put under Public/Free-float, but be included in the Controlling/ Strategic Interest Section. To elaborate, Controlling Interest/ Strategic Holding/In-concert Holding refers to entities who are in control of the company, directly or indirectly, whether as a shareholder , director or otherwise and includes all such holdings that would be covered in the categories listed above (and control is defined as right to appoint / reapoint/remove any director on the Board of Directors or to control the management or policy decisions exercisable by a person or persons acting individually or in concert, directly or indirectly, including by virtue of their shareholding or management rights or shareholders agreements or voting agreements or in any other manner and including persons who are instrumental in the formulation or implementation of a plan or programme or who are guarantors to the borrowings of the company or who can influence the investment and/or borrowing powers of the company) or person or persons named as promoters in any offer document filed with SEBI, stock exchange, ROC or any other body for the offer of securities to the public or existing shareholders and who continue to be presently associated with the controlling entity.

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DELISTING

In December 1998, the Mumbai Stock Exchange has threatened to delist shares of over 700 companies for non-payment of listing fee for 1997-98 by December 1998. Over the past years, several companies incurred loss and many of them were unable to pay the listing fee. But many companies purposefully avoided paying the listing fee. Delisting the companys share prevents the public scrutiny of performance. Many companies made public issue itself a business. Thus delisting may be compulsory or voluntary. Some of the common causes for delisting are given below .

COMPULSORY
a) Non-payment of listing fee or violation of listing agreement.

b) Thin/negligible trading or thin shareholding base.

c) Non redressal of grievances.

d) Unfair trade practices at the behest of promoters or managers, and malpractice such as issuing of duplicate fake shares by management.

VOLUNTARY
a) Unable to pay the listing fee. Listing fee is prohibitive.

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b) Business sick/ suspended/ closed.

c) Capital base is small.

d) Mergers, demergers, amalgamations and takeovers.

CONDITIONS FOR VOLUNTARY DELISTING

i. Company must have incurred losses in the preceding three years, with net worth less than the paid-up capital.

ii.

Securities have been infrequently traded.

iii.

Securities remain listed at least on the regional stock exchange.

If these conditions are not fulfilled, Central Government approval would be needed. The other ground under which voluntary delisting can be allowed by a stock exchange is for thin public share holding.

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RECENT DEVELOPMENTS IN THE FIELD OF LISTING

Share of the companies listed on exchanges other than the Bombay Stock Exchange and seeking listing on it, will be required to have a minimum market capitalization of Rs 20 crores as against the previous criterion of Rs 10 crores of issued capital.

The BSE board has decided that companies should have necessarily recorded profits for the last three years, traded on at least half the total trading days with a minimum of five trades and 500 shares on any given day and have 20 per cent of the stock held with the public.

The board also decided to institute awards for investor friendly companies. Categorized into three, companies would be awarded for best returns, being proactive in servicing investor needs and corporate governance. Non friendly companies are classified into Z category, the exchange has identified 300 such companies.

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e)

OBJECTIVE OF THE RESEARCH

The following are the objectives of the present study: To study the working of the stock exchanges. Role of listing department in the revenue generation for stock exchange. To understand the listing procedure of companies in Stock Exchanges. To search the reason for the decreasing rate of listing of securities. To search the reason for the increasing rate of delisting of securities.

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SCOPE OF THE STUDY

This project will help in creating a deep understanding on the working of the regional stock exchanges. This project throws a special focus on the base of stock exchanges Listing Department this is the only department of any Stock Exchange which generates the maximum revenue but due to migration of companies towards NSE & BSE has snatched its identity. The present work helps in enhancing the knowledge about the listing department of the regional stock exchanges. It explains the complete listing procedure of the listing of the securities in the regional stock exchange. The project explains the complete working of the Stock Exchanges every department. The given project explains the various important aspects related to the listing & delisting of the securities listed with an exchange

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RESEARCH METHODOLOGY
TOPIC : Working of stock exchanges listing department& Proposed restructuring of regional stock exchanges SIGNIFICANCE OF STUDY :

The scope of this study is to understand the working of the stock exchanges listing department that how it helps in generating the revenue for stock exchange. This study further reveals how securities get enlisted in the stock exchanges. This project aims at focusing on the current problem faced by all the stock exchanges i.e. delisting of securities from regional stock exchanges which is putting a question mark on the existence of regional stock exchanges. DATA USED :

This study is completely based on the secondary data. The secondary data were collected from the books and various websites. DATA COLLECTION TYPE: Most of the data collected in this study is based on the secondary data and partially on the response given by the employees of UPSE.

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IMPORTANCE OF STUDY

This project report will prove its importance in following ways Helps in understanding the securities markets working Helps in understanding the working of the stock exchanges Importance of SEBI in the growth and functioning of the stock exchanges Explains the working of the various departments of the stock exchanges Explains the complete procedure of listing of securities in stock exchanges Reason for the delisting of securities Proposed restructuring of regional stock exchanges

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LIMITATIONS OF THE PROJECT REPORT

Few of the limitations of the present research report are as follows The complete project is completely based on the secondary data and partially on the response provided by the employees of the stock exchange. Variation in data may exist Most of the data provide in this report is in context with UPSE, NSE & BSE

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102