Procedures for ensuring compliance with SECC Regulations by Listed Stock Exchanges
Summary
This circular prescribes procedures for listed stock exchanges to ensure compliance with the SECC Regulations, 2012. It mandates maintaining a minimum 51% public shareholding and ensuring all shareholders meet fit and proper criteria. The document outlines specific monitoring obligations for depositories and reporting requirements to SEBI.
Text
Regulation 45 of the SECC Regulations provides for listing of stock exchanges. As per Regulation 45(2) of the SECC Regulations, the Board may specify such conditions as it may deem fit in the interest of the securities market.
The listed stock exchange shall disseminate the details of its shareholding with category wise breakup (as per the format specified vide SEBI Circular dated October 24, 2011), on a continuous basis, on its website. Similarly, the stock exchange where the shares are listed, shall also display the above information.
The depositories shall put in place necessary system to ensure that the shareholding of trading members or their associates and agents does not exceed 49 per cent... The depositories shall also monitor the aggregate shareholding limit of the trading members or their associates and agents based on their demat balance, on a daily basis, at the end of the day.
The trading members or their associates and agents shall obtain prior approval of the listed stock exchange for further acquisition of shares, once the aggregate shareholding of the trading members or their associates and agents crosses the limit of 45 per cent.
In the event of trading members or their associates and agents making purchases without requisite approval as stated above, the depositories shall initiate consequential action such as freezing of voting rights and all corporate benefits in respect of such shareholding till the time the same is divested.
The divestment of any excess shareholding beyond the specified limit would be through a special window provided by the stock exchange where the shares of the stock exchange are listed.
In the pre-listing scenario, the exchange coming out with a public offering shall include a declaration in the application form stating that the applicant is fit and proper in terms of Regulation 19 and 20 of SECC Regulations, 2012.
In the post listing scenario, the text of the applicable regulation with regard to fit and proper shall be made part of the contract note.
The listed stock exchange shall also undertake all measures to make investors aware of the requirement of fit and proper criteria for being its shareholders as specified in regulation 19 and 20 of SECC Regulations.
The depositories shall put in place a mechanism to ensure that no shareholder of listed stock exchange gets credit of shares beyond 5 per cent or 15 per cent, as applicable. The depositories shall generate an alert when such holding exceeds 2 per cent and monitor the same under intimation to SEBI.
The stock exchanges, both listed and where the securities are listed, and depositories shall ensure that aforesaid mechanism be in place latest by March 31, 2016.
The stock exchange submitting application for listing of its securities to SEBI shall ensure strict compliance with Chapter VII of SECC Regulations, 2012.
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Source: SecMarx — Procedures for ensuring compliance with SECC Regulations by Listed Stock Exchanges. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.