nse & bse

APROJECT REPORT

ON

“A COMPARATIVE STUDY OF NSE &BSE”

FOR THE PARTIAL FULFILLMENT OF DEGREE OF BECHELOR OF

BUSINESS ADMINISTRATION

SUBMITTED TO: SUBMITTED BY:

MS. SAFIA KHAN SHELENDRA BHATT

LECTURER MGMT. DEPT MBA 3RD

AMRAPALI INSTITUTE OF MANAGEMENT AND COMPUTER

APPLICATION

Shiksha Nagar, Lamachaur, Haldwani(Affiliated to Uttarakhand Technical University) Dehradun

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ACKNOWLEDGMENT

I would like to express my sincere gratitude and thanks to all whom in some

way or the other helped and guided me in the due course of the completion

of this project work. It was indeed impossible for me to accomplish to this

task without the timely accelerating encouragement and exuberant support .it

will be unfair to mention the name of those who directly or indirectly helped

me to make it a success.

It goes beyond words to express my special thanks to Ms. Safia Khan, who

despite of her busy schedule for providing information which I required for

my project.

SHELENDRA BHATT

MBA 3rd

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TABLE OF CONTENTS

NATIONAL STOCK EXCHANGE

ABOUT NSE

CORPORATE STRUCTURE

EQUITIES

LISTING

LISTING PROCEDURE ON NSE

ELIGIBILITY CRITERIA FOR LISTING ON NSE

BOMBAY STOCK EXCHANGE

ABOUT BSE

LISTINGS OF SECURITIES ON BSE

BIBLOGRAPHY

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DECLARATION

I, Shelendra Bhatt, Student of MBA, Amrapali Institute declare that the

project on “A Comaparative Study Of NSE & BSE” is the result of my own

efforts and it is based on data collected and guidance given to me.

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NATIONAL STOCK EXCHANGE

The National Stock Exchange (NSE) is India's leading stock exchange

covering various cities and towns across the country. NSE was set up by

leading institutions to provide a modern, fully automated screen-based

trading system with national reach. The Exchange has brought about

unparalleled transparency, speed & efficiency, safety and market integrity. It

has set up facilities that serve as a model for the securities industry in terms

of systems, practices and procedures. 

NSE has played a catalytic role in reforming the Indian securities market in

terms of microstructure, market practices and trading volumes. The market

today uses state-of-art information technology to provide an efficient and

transparent trading, clearing and settlement mechanism, and has witnessed

several innovations in products & services viz. demutualisation of stock

exchange governance, screen based trading, compression of settlement

cycles, dematerialisation and electronic transfer of securities, securities

lending and borrowing, professionalisation of trading members, fine-tuned

risk management systems, emergence of clearing corporations to assume

counterparty risks, market of debt and derivative instruments and intensive

use of information technology.

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THE ORGANISATION

The National Stock Exchange of India Limited has genesis in the report of

the High Powered Study Group on Establishment of New Stock Exchanges,

which recommended promotion of a National Stock Exchange by financial

institutions (FIs) to provide access to investors from all across the country

on an equal footing. Based on the recommendations, NSE was promoted by

leading Financial Institutions at the behest of the Government of India and

was incorporated in November 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 the

Wholesale Debt Market (WDM) segment in June 1994. The Capital Market

(Equities) segment commenced operations in November 1994 and

operations in Derivatives segment commenced in June 2000.

Mission

NSE's mission is setting the agenda for change in the securities markets in

India. The NSE was set-up with the main objectives of:

establishing a nation-wide trading facility for equities, debt

instruments and hybrids,

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ensuring equal access to investors all over the country through an

appropriate communication network,

providing a fair, efficient and transparent securities market to

investors using electronic trading systems,

enabling shorter settlement cycles and book entry settlements systems,

and

meeting the current international standards of securities markets.

The standards set by NSE in terms of market practices and technology have

become industry benchmarks and are being emulated by other market

participants. NSE is more than a mere market facilitator. It's that force which

is guiding the industry towards new horizons and greater opportunities.

Logo

The logo of the NSE symbolises a single nationwide securities trading

facility ensuring equal and fair access to investors, trading members and

issuers all over the country. The initials of the Exchange viz., N, S and E

have been etched on the logo and are distinctly visible. The logo symbolises

use of state of the art information technology and satellite connectivity to

bring about the change within the securities industry. The logo symbolises

vibrancy and unleashing of creative energy to constantly bring about change

through innovation

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PROMOTERS

NSE has been promoted by leading financial institutions, banks, insurance

companies and other financial intermediaries:

1. Industrial Development Bank of India Limited

2. Industrial Finance Corporation of India Limited

3. Life Insurance Corporation of India

4. State Bank of India

5. ICICI Bank Limited

6. IL & FS Trust Company Limited

7. Stock Holding Corporation of India Limited

8. SBI Capital Markets Limited

9. The Administrator of the Specified Undertaking of Unit Trust of India

10. Bank of Baroda

11. Canara Bank

12. General Insurance Corporation of India

13. National Insurance Company Limited

14. The New India Assurance Company Limited

15. The Oriental Insurance Company Limited

16. United India Insurance Company Limited

17. Punjab National Bank

18. Oriental Bank of Commerce

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19. Corporation Bank

20. Indian Bank

21. Union Bank of India

CORPORATE STRUCTURE

NSE is one of the first de-mutualised stock exchanges in the country, where

the ownership and management of the Exchange is completely divorced

from the right to trade on it. Though the impetus for its establishment came

from policy makers in the country, it has been set up as a public limited

company, owned by the leading institutional investors in the country.

From day one, NSE has adopted the form of a demutualised exchange - the

ownership, management and trading is in the hands of three different sets of

people. NSE is owned by a set of leading financial institutions, banks,

insurance companies and other financial intermediaries and is managed by

professionals, who do not directly or indirectly trade on the Exchange. This

has completely eliminated any conflict of interest and helped NSE in

aggressively pursuing policies and practices within a public interest

framework.

The NSE model however, does not preclude, but in fact accommodates

involvement, support and contribution of trading members in a variety of

ways. Its Board comprises of senior executives from promoter institutions,

eminent professionals in the fields of law, economics, accountancy, finance,

taxation, etc, public representatives, nominees of SEBI and one full time

executive of the Exchange.While the Board deals with broad policy issues,

decisions relating to market operations are delegated by the Board to various

committees constituted by it. Such committees include representatives from

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trading members, professionals, the public and the management. The day-to-

day management of the Exchange is delegated to the Managing Director

who is supported by a team of professional staff.

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COMMITTEES

The Exchange has constituted various committees to advise it on areas such

as good market practices, settlement procedures, risk containment systems

etc. These committees are manned by industry professionals, trading

members, Exchange staff as also representatives from the market regulator.

Executive Committee

Committee On Trade Related Issues (COTI)

Advisory Committee - Listing of Securities

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EQUITIES

NSE started trading in the equities segment (Capital Market segment) on

November 3, 1994 and within a short span of 1 year became the largest

exchange in India in terms of volumes transacted.

Trading volumes in the equity segment have grown rapidly with average

daily turnover increasing from Rs.17 crores during 1994-95 to Rs.4,328

crores during 2003-04. During the year 2003-04, NSE reported a turnover of

Rs.1,099,535 crores in the equities segment accounting for 68.60% of the

total Indian securities market.

The Equities section provides you with an insight into the equities segment

of NSE and also provides real-time quotes and statistics of the equities

market. In-depth information regarding listing of securities, trading systems

& processes, clearing and settlement, risk management, trading statistics etc

are available here.

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LISTING

Listing means admission of securities of an issuer to trading privileges on a

stock exchange through a formal agreement. The prime objective of

admission to dealings on the Exchange is to provide liquidity and

marketability to securities, as also to provide a mechanism for effective

management of trading.

Listing on NSE provides qualifying companies with the broadest access to

investors, the greatest market depth and liquidity, cost-effective access to

capital, the highest visibility, the fairest pricing, and investor benefits. NSE

trading terminals are now situated in various cities and towns across the

length and breath of India.

Securities listed on the Exchange are required to fulfill the eligibility criteria

for listing. Various types of securities of a company are traded under a

unique symbol and different series.

NSE plays an important role in helping an Indian companies access equity

capital, by providing a liquid and well-regulated market. NSE has about 800

companies listed representing the length, breadth and diversity of the Indian

economy which includes from hi-tech to heavy industry, software, refinery,

public sector units, infrastructure, and financial services. Listing on NSE

raises a company’s profile among investors in India and abroad. Trade data

is distributed worldwide through various news-vending agencies.

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More importantly, each and every NSE listed company is required to satisfy

stringent financial, public distribution and management requirements. High

listing standards foster investor confidence and also bring credibility into the

markets.

NSE lists securities in its Capital Market (Equities) segment and its

Wholesale Debt Market segment

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LISTING PROCEDURE

An Issuer has to take various steps prior to making an application for

listing its securities on the NSE. These steps are essential to ensure the

compliance of certain requirements by the Issuer before listing its

securities on the NSE. The various steps to be taken include:

1. Initial Discussions

2. Approval of Memorandum and Articles of Association

3. Approval of draft prospectus

4. Submission of Application

5. Listing conditions and requirements

Initial Discussions

Authorised persons of the concerned Issuer should hold discussions with

NSE personnel regarding various requirements to be fulfilled by the Issuer

for listing its securities. The discussions should particularly cover the

qualifications of the Issuer which are required for an Issuer to be admitted

for listing on the NSE and to understand all the conditions that are precedent

to listing on the NSE. The proposed Memorandum & Articles of Association

and the draft prospectus may be presented to the NSE for examination

before finalizing.

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Approval of Memorandum and Articles of Association

Rule 19(2) (a) of the Securities Contracts (Regulation) Rules, 1957 requires

that the Articles of Association of the Issuer wanting to list its securities

must contain provisions as given hereunder.

The Articles of Association of an Issuer shall contain the following

provisions namely:

a. that there shall be no forfeiture of unclaimed dividends before the

claim becomes barred by law;

b. that a common form of transfer shall be used;

c. that fully paid shares shall be free from all lien and that in the case of

partly paid shares the Issuer's lien shall be restricted to moneys called

or payable at a fixed time in respect of such shares;

d. that registration of transfer shall not be refused on the ground of the

transferor being either alone or jointly with any other person or

persons indebted to the Issuer on any account whatsoever;

e. that any amount paid up in advance of calls on any share may carry

interest but shall not in respect thereof confer a right to dividend or to

participate in profits;

f. that option or right to call of shares shall not be given to any person

except with the sanction of the Issuer in general meetings.

g. permission for Sub-Division/Consolidation of Share Certificate.

Note: The Relevant Authority may take exception to any provision

contained in the Articles of Association of an Issuer which may be deemed

undesirable or unreasonable in the case of a public company and may

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require inclusion of specific provisions deemed to be desirable and

necessary.

If the Issuer's Articles of Association is not in conformity with the

provisions as stated above, the Issuer has to make amendments to the

Articles of Association. However, the securities of an Issuer may be

admitted for listing on the NSE on an undertaking by the Issuer that the

amendments necessary in the Articles of Association to bring Articles of

Association in conformity with Rule 19(2)(a) of the Securities Contract

(Regulation) Rules, 1957 shall be made in the next annual general meeting

and in the meantime the Issuer shall act strictly in accordance with prevalent

provisions of Securities Contract (Regulation) Act, 1957 and other statutes.

It is to be noted that any provision in the Articles of Association, which is

not in tune with sound corporate practice, has to be removed by amending

the Articles of Association.

Approval of draft prospectus

The Issuer shall file the draft prospectus and application forms with NSE. In

case NSE is not the Regional Stock Exchange then the draft prospectus and

application forms have to be filed simultaneously with the NSE when the

same is filed with the Regional Stock Exchange pertaining to the issue, for

the perusal of NSE. The draft prospectus should have been prepared in

accordance with the statutes, notifications, circulars, guidelines, etc.

governing preparation and issue of prospectus prevailing at the relevant

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time. The Issuers may particularly bear in mind the provisions of Companies

Act, Securities Contracts (Regulation) Act, the SEBI Act and the relevant

subordinate legislations thereto. NSE will peruse the draft prospectus only

from the point of view of checking whether the draft prospectus is in

accordance with the listing requirements, and therefore any approval given

by NSE in respect of the draft prospectus should not be construed as

approval under any laws, rules, notifications, circulars, guidelines etc. The

Issuers shall file a copy of the draft prospectus given by the respective

Regional Stock Exchange with NSE. The Issuer should also submit the SEBI

acknowledgment card or letter indicating observations on draft prospectus or

letter of offer by SEBI

Submission of Application

For Issuers listing on NSE for the first time

Listing of further Issues by Issuers already listed on NSE

Listing Fees

Security deposit (for new & fresh issues and when NSE is the

Regional Stock Exchange)

Supporting documents

Submission of Application (For Issuers listing on NSE for the first

time)

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Issuers desiring to list existing/new securities on the NSE shall make

application for admission of their securities to dealings on the NSE in the

forms prescribed in this regard as per details given hereunder or in such

other form or forms as the Relevant Authority may from time to time

prescribe in addition thereto or in modification or substitution thereof.

Appendix 'A' - Clauses of Articles of Association.

Appendix 'B'- Application Letter for Listing.

Appendix 'C-1' - Listing Application providing pre-issue details of

securities.

Appendix 'C-2' - Listing Application providing post-issue details of

securities.

Appendix 'D'- Checklist for supporting documents ( as applicable to the

issuer)

Appendix 'E' - Schedule of Distribution

Appendix 'F'- Listing Agreement

Submission of Application (Listing of further Issues by Issuers already

listed on NSE)

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Listing Fees

The listing fees depend on the paid up share capital of your Company:

Particulars Amount (Rs.)

Initial Listing Fees 7,500

Annual Listing Fees

Companies with paid up share and/or debenture capital:

Of Rs.1 crore 4,200

Above Rs.1 crore and up to Rs.5 crores 8,400

Above Rs.5 crores and up to Rs.10 crores 14,000

Above Rs.10 crores and up to Rs.20 crores 28,000

Above Rs.20 crores and up to Rs.50 crores 42,000

Above Rs.50 crores 70,000

Companies which have a paid up capital of more than Rs. 50 crores will pay

additional listing fees of Rs. 1400 for every increase of Rs. 5 crores or part

thereof in the paid up share/debenture capital.

Kindly draw your Cheques/Demand Drafts favouring National Stock

Exchange of India Limited, payable in Mumbai.

Submission of Application (Security Deposit)

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(Payable only for new and fresh issues and only when NSE is the Regional

Stock Exchange)

The Relevant Authority shall not grant admission to dealings of securities of

an Issuer which is not listed or of any new (original or further) issue of

securities of an Issuer excepting Mutual Funds, which is listed on the NSE

unless the Issuer deposits and keeps deposited with the NSE (in cases where

the securities are offered for subscription, whether through the issue of a

prospectus, letter of offer or otherwise, and NSE is the Regional Stock

Exchange for the Issuer) an amount calculated at 1% of the amount of

securities offered for subscription to the public and or to the holders of

existing securities of the Issuer, as the case may be for ensuring compliance

by the Issuer within the prescribed or stipulated period of all requirements

and conditions hereinafter mentioned and shall be refundable or forfeitable

in the manner hereinafter stated:

1. The Issuer shall comply with all prevailing requirements of law

including all requirements of and under any notifications, directives

and guidelines issued by the Central Government, SEBI or any

statutory body or local authority or any body or authority acting under

the authority or direction of the Central Government and all prevailing

listing requirements and conditions of the NSE and of each recognized

Stock Exchange where the Issuer has applied for permission for

admission to dealings of the securities, within the prescribed or

stipulated period;

2. If the Issuer has complied with all the aforesaid requirements and

conditions including, wherever applicable, its obligation under

Section 73 (or any statutory modification or re-enactment thereof) of

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the Companies Act, 1956 and obligations arising therefrom, within the

prescribed or stipulated period, and on obtaining a No Objection

Certificate from SEBI and submitting it to NSE , NSE shall refund to

the Issuer the said deposit without interest within fifteen days from the

expiry of the prescribed or stipulated period;

3. If on expiry of the prescribed or stipulated period or the extended

period referred to hereafter, the Issuer has not complied with all the

aforesaid requirements and conditions, the said deposit shall be

forfeited by the NSE, at its discretion, and thereupon the same shall

vest in the NSE. Provided the forfeiture shall not release the Issuer of

its obligation to comply with the aforesaid requirements and

conditions;

4. If the Issuer is unable to complete compliance of the aforesaid

requirements and conditions within the prescribed or stipulated

period, the NSE, at its discretion and if the Issuer has shown sufficient

cause, but without prejudice to the obligations of the Issuer under the

laws in force to comply with any such requirements and conditions

within the prescribed or stipulated period, may not forfeit the said

deposit but may allow such further time to the Issuer as the NSE may

deem fit; provided that

1. the Issuer has at least ten days prior to expiry of the prescribed

or stipulated period applied in writing for extension of time to

the NSE stating the reasons for non-compliance, and

2. the Issuer, having been allowed further time by the NSE, has

before expiry of the prescribed or stipulated period, published

in a manner required by the NSE, the fact of such extension

having been allowed; provided further that where the NSE has

not allowed extension in writing before expiry of the prescribed

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or stipulated period, the request for extension shall be deemed

to have been refused; provided also that any such extension

shall not release the Issuer of its obligations to comply with the

aforesaid requirements and conditions.

5. 50% of the above mentioned security deposit should be paid to the

NSE in cash. The balance amount can be provided by way of a bank

guarantee, in the format prescribed by or acceptable to NSE.

Submission of Application (Supporting Documents)

Issuers applying for admission of their securities to dealings on the NSE

shall submit to the NSE the following:

Documents and Information

The documents and information prescribed in Appendix D or Appendix I

(as the case may be) to this Regulation or such other documents and

information as the Relevant Authority may from time to time prescribe,

in addition thereto or in modification or substitution thereof together with

any other documents and information which the Relevant Authority may

require in any particular case;

Distribution Schedules

Distribution Schedules duly completed in respect of each class and kind

of security in the form prescribed in Appendix E (Table I, II & III) to this

Regulation or in such other form or forms as the Relevant Authority may

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from time to time prescribe in addition thereto or in modification or

substitution thereof.

Listing conditions and requirements

All Issuers whose securities are listed on the NSE shall comply with the

listing conditions and requirements contained in the Listing Agreement

Form appearing in Appendix F to this Regulation or such other conditions

and requirements as the Relevant Authority may from time to time prescribe

in addition thereto or in modification or substitution thereof.

After fulfilling these criteria, a company has to send the following

information for further processing:

1. A brief note on the promoters and management.

2. Company profile.

3. Copies of the Annual Report for last 3 years.

4. Copies of the Draft Offer Document.

5. Memorandum & Articles of Association.

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ELIGIBILITY CRITERIA FOR LISTING

An applicant who desires listing of its securities with NSE must fulfill the

following pre-requisites:

A. For Initial Public Offerings (IPOs)

B. For Securities of Existing Companies

NSE staff welcome the opportunity to discuss a company’s eligibility to list

before a formal application is made. On fulfillment of the eligibility criteria,

the company is required to fill in the listing application form.

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IPOs by Companies

Qualifications for listing Initial Public Offerings (IPO) are as below:

1. Paid up Capital

The paid up equity capital of the applicant shall not be less than Rs. 10

crores * and the capitalisation of the applicant’s equity shall not be less

than Rs. 25 crores**

In respect of the requirement of paid-up capital and market capitalisation,

the issuers shall be required to include, in the disclaimer clause forming a

part of the offer document that in the event of the market capitalisation

(Product of issue price and the post issue number of shares) requirement

of the Exchange not being met, the securities of the issuer would not be

listed on the Exchange.

* For this purpose, the post issue paid up equity capital for which listing

is sought shall be taken into account.

**For this purpose, capitalisation will be the product of the issue price

and the post issue number of equity shares.

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2. Conditions Precedent to Listing:

The Issuer shall have adhered to conditions precedent to listing as

emerging from inter-alia from Securities Contracts (Regulations) Act

1956, Companies Act 1956, Securities and Exchange Board of India Act

1992, any rules and/or regulations framed under foregoing statutes, as

also any circular, clarifications, guidelines issued by the appropriate

authority under foregoing statutes.

3. At least three years track record of either:

a. The applicant seeking listing; or

b. The promoters*/promoting company, incorporated in or outside India

For this purpose, the applicant or the promoting company shall submit

annual reports of three preceding financial years to NSE and also provide

a certificate to the Exchange in respect of the following:

• The Company has not been referred to the Board for Industrial and

Financial Reconstruction (BIFR).

• The networth of the company has not been wiped out by the

accumulated losses resulting in a negative networth.

• The company has not received any winding up petition accepted by a

court.

* Promoters’ mean one or more persons with minimum 3 years of

experience of each of them in the same line of business and shall be

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holding at least 20% of the post issue equity share capital individually or

severally

4. The Project/ Activity plan of the applicant must have been appraised

by a financial institution u/s 4 A of the Companies Act, 1956 or a state

finance corporation or a scheduled commercial bank with a paid up

capital exceeding Rs.50 crores or a category I Merchant Banker with a

net worth of atleast Rs.10 crores or a venture capital fund with a net

worth of atleast Rs. 50 crores.

or

The applicant should have working capital arrangements with a bank

having a Networth of not less than Rs.50 crores.

“Provided that this Clause 4 shall not be applicable for listing of:

a) Equity shares and securities convertible into equity issued by

1. a banking company including a local area bank (i.e. Private

Sector Banks) set up under sub-clause (c) of Section 5 of the

Banking Regulation Act, 1949 and which has received license

from the Reserve Bank of India or

2. a corresponding new bank set up under the Banking Companies

(Acquisition and Transfer of Undertakings) Act, 1970, Banking

Companies (Acquisition and Transfer of Undertakings) Act,

1980, State Bank of India Act, 1955 and the State Bank of India

(Subsidiary Banks) Act, 1959 (i.e. Public Sector Banks) or

3. an infrastructure company – (a) whose project has been

appraised by a Public Financial Institution or Infrastructure

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Development Finance Corporation (IDFC) or Infrastructure

Leasing and Financial Services Limited (IL&FS) and (b) not

less than 5% of the project cost is financed by any of the

institutions referred to in clause (a) above, jointly or severally,

irrespective of whether they appraise the project or not, by way

of loan or subscription to equity or a combination of both.

b) Securities other than equity shares or securities convertible into equity

shares at a later date issued by Government Companies, Public Sector

Undertakings, Financial Institutions, Nationalised Banks, Statutory

Corporations, Banking Companies and subsidiaries of Scheduled

Commercial Banks.”

5) The applicant desirous of listing its securities should satisfy the

exchange on the following:

No disciplinary action by other stock exchanges and

regulatory authorities in past three years

The applicant, promoters’/promoting company(ies), group

companies, companies promoted by the promoters/promoting

company(ies) have not been in default in payment of listing

fees to any stock exchange in the last three years or has not

been delisted or suspended in the past, and has not been

proceeded against by SEBI or other regulatory authorities in

connection with investor related issues or otherwise.

Redressal mechanism of Investor grievance

The points of consideration are:

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The applicant, promoters’/promoting company(ies), group

companies, companies promoted by the promoters’/promoting

11company(ies) track record in redressal of investor

grievances

The applicant’s arrangements envisaged are in place for

servicing its investor.

The applicant, promoters’/promoting company(ies), group

companies, companies promoted by the promoters/promoting

company(ies) general approach and philosophy to the issue of

investor service and protection

defaults in respect of payment of interest and/or principal to

the debenture/bond/fixed deposit holders by the applicant,

promoters’/promoting company(ies), group companies,

companies promoted by the promoters’/promoting

company(ies) shall also be considered while evaluating a

company’s application for listing. The auditor’s certificate

shall also be obtained in this regard. In case of defaults in

such payments the securities of the applicant company may

not be listed till such time it has cleared all pending

obligations relating to the payment of interest and/or

principal.

Distribution of shareholding

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The applicant’s/promoting company(ies) shareholding pattern

on March 31 of last three calendar years separately showing

promoters and other groups’ shareholding pattern should be as

per the regulatory requirements.

Details of Litigation

The applicant, promoters’/promoting company(ies), group

companies, companies promoted by the promoters/promoting

company(ies) litigation record, the nature of litigation, status

of litigation during the preceding three years period need to be

clarified to the exchange.

Track Record of Director(s) of the Company

In respect of the track record of the directors, relevant

disclosures may be insisted upon in the offer document

regarding the status of criminal cases filed or nature of the

investigation being undertaken with regard to alleged

commission of any offence by any of its directors and its

effect on the business of the company, where all or any of the

directors of issuer have or has been charge-sheeted with

serious crimes.

Note:

In case a company approaches the Exchange for listing within six

months of an IPO, the securities may be considered as eligible for

listing if they were otherwise eligible for listing at the time of the

IPO. If the company approaches the Exchange for listing after six

months of an IPO, the norms for existing listed companies may be

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applied and market capitalisation be computed based on the period

from the IPO to the time of listing.

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BOMBAY STOCK EXCH ANGE

Bombay Stock Exchange Limited is the oldest stock exchange in Asia with a

rich heritage. Popularly known as "BSE", it was established as "The Native

Share & Stock Brokers Association" in 1875. It is the first stock exchange in

the country to obtain permanent recognition in 1956 from the Government of

India under the Securities Contracts (Regulation) Act, 1956.The Exchange's

pivotal and pre-eminent role in the development of the Indian capital market

is widely recognized and its index, SENSEX, is tracked worldwide. Earlier

an Association of Persons (AOP), the Exchange is now a demutualised and

corporatised entity incorporated under the provisions of the Companies Act,

1956, pursuant to the BSE(Corporatisation and Demutualisation) Scheme,

2005 notified by the Securities and Exchange Board of India (SEBI).

With demutualisation, the trading rights and ownership rights have been de-

linked effectively addressing concerns regarding perceived and real conflicts

of interest. The Exchange is professionally managed under the overall

direction of the Board of Directors.The Board comprises eminent

professionals, representatives of Trading Members and the Managing

Director of the Exchange. The Board is inclusive and is designed to benefit

from theparticipation of market intermediaries.

In terms of organisation structure, the Board formulates larger policy issues

and exercises over-all control. The committees constituted by the Board are

broad-based.The day-to-dayoperations of the Exchange are managed by the

Managing Director and a management team of professionals.

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The Exchange has a nation-wide reach with a presence in 417 cities and

towns of India. The systems and processes of the Exchange are designed to

safeguard market integrity and enhance transparency in operations. During

the year 2004-2005, the trading volumes on the Exchange showed robust

growth.

The Exchange provides an efficient and transparent market for trading in

equity, debt instruments and derivatives. The BSE's On Line Trading System

(BOLT) is a proprietory system of the Exchange and is BS 7799-2-2002

certified. The surveillance and clearing & settlement functions of the

Exchange are ISO 9001:2000 certified.

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HERITAGE

The oldest exchange in Asia and the first exchange in the country to be

granted permanent recognition under the Securities Contract Regulation Act,

1956, Bombay Stock Exchange Limited (BSE) has had an interesting rise to

prominence over the past 130 years.

While the BSE is now synonymous with Dalal Street, it wasn’t always so. In

fact the first venues of the earliest stock broker meetings in the 1850s were

amidst rather natural environs - under banyan trees - in front of the Town

Hall, where Horniman Circle is now situated. A decade later, the brokers

moved their venue to another set of foliage, this time under banyan trees at

the junction of Meadows Street and Mahatma Gandhi Road. As the number

of brokers increased, they had to shift from place to place, and wherever

they went, through sheer habit, they overflowed in to the streets. At last, in

1874, found a permanent place, and one that they could, quite literally, call

their own. The new place was, aptly, called Dalal Street.

The journey of BSE is as eventful and interesting as the history of India’s

securitiesmarkets. India’s biggest bourse, in terms of listed companies and

market capitalisation, BSE has played a pioneering role in the Indian

Securities Market - one of the oldest in the world. Much before actual

legislations were enacted, BSE had formulated comprehensive set of Rules

and Regulations for the Indian Capital Markets. It also laid down best

practices adopted by the Indian Capital Markets after India gained its

Independence.

35

Perhaps, there would not be any leading corporate in India, which has not

sourced BSE’s services in resource mobilization.

BSE as a brand is synonymous with capital markets in India. The BSE

SENSEX is the benchmark equity index that reflects the robustness of the

economy and finance. At par with international standards, BSE has been a

pioneer in several areas. It has several firsts to its credit even in an intensely

competitive environment.

First in India to introduce Equity Derivatives

First in India to launch a Free Float Index

First in India to launch US$ version of BSE Sensex

First in India to launch Exchange Enabled Internet Trading Platform

First in India to obtain ISO certification for Surveillance, Clearing &

Settlement

'BSE On-Line Trading System’ (BOLT) has been awarded the

globally

 recognised the Information Security Management System standard

 BS7799-2: 2002.

First to have an exclusive facility for financial training

Moved from Open Outcry to Electronic Trading within just 50 days

An equally important accomplishment of BSE is the launch of a nationwide

investor awareness campaign - Safe Investing in the Stock Market - under

which nationwide awareness campaigns and dissemination of information

through print and electronic medium was undertaken. BSE also actively

36

promoted the securities market awareness campaign of the Securities and

Exchange Board of India.

In 2002, the name The Stock Exchange, Mumbai, was changed to BSE.

BSE, which had introduced securities trading in India, replaced its open

outcry system of trading in 1995, when the totally automated trading through

the BSE Online trading (BOLT) system was put into practice. The BOLT

network was expanded, nationwide, in 1997. It was at the BSE's

International Convention Hall that India’s 1st Bell ringing ceremony in the

history Capital Markets was held on February 18th, 2002. It was the listing

ceremony of Bharti Tele ventures Ltd.

BSE with its long history of capital market development is fully geared to

continue its contributions to further the growth of the securities markets of

the country, thus helping India increase its sphere of influence in

international financial markets.

For the premier Stock Exchange that pioneered the stock broking activity in

India, 125 years of experience seem to be a proud milestone. A lot has

changed since 1875 when 318 persons became members of what today is

called "Bombay Stock Exchange Limited" by paying a princely amount of

Re1.

Since then, the stock market in the country has passed through both good

and bad periods. The journey in the 20th century has not been an easy one.

Till the decade of eighties, there was no measure or scale that could

precisely measure the various ups and downs in the Indian stock market.

Bombay Stock Exchange Limited (BSE) in 1986 came out with a Stock

Index that subsequently became the barometer of the Indian Stock Market.

37

BSE-SENSEX, first compiled in 1986 is a "Market Capitalization-Weighted"

index of 30 component stocks representing a sample of large, well-

established and financially sound companies. The base year of BSE-

SENSEX is 1978-79. The index is widely reported in both domestic and

international markets through print as well as electronic media. BSE-

SENSEX is not only scientifically designed but also based on globally

accepted construction and review methodology. The "Market Capitalization-

Weighted" methodology is a widely followed index construction

methodology on which majority of global equity benchmarks are based.

The growth of equity markets in India has been phenomenal in the decade

gone by. Right from early nineties the stock market witnessed heightened

activity in terms of various bull and bear runs. More recently, the bourses in

India witnessed a similar frenzy in the 'TMT' sectors. The BSE-SENSEX

captured all these happenings in the most judicial manner. One can identify

the booms and bust of the Indian equity market through BSE-SENSEX.

The launch of BSE-SENSEX in 1986 was later followed up in January 1989

by introduction of BSE National Index (Base: 1983-84 = 100). It comprised

of 100 stocks listed at five major stock exchanges in India at Mumbai,

Calcutta, Delhi, Ahmedabad and Madras. The BSE National Index was

renamed as BSE-100 Index from October 14, 1996 and since then it is

calculated taking into consideration only the prices of stocks listed at BSE.

With a view to provide a better representation of the increased number of

companies listed, increased market capitalisation and the new industry

groups, the Exchange constructed and launched on 27th May, 1994, two new

index series viz., the 'BSE-200' and the 'DOLLEX-200' indices. Since then,

BSE has come a long way in attuning itself to the varied needs of investors

38

and market participants. In order to fulfill the need of the market participants

for still broader, segment-specific and sector-specific indices, the Exchange

has continuously been increasing the range of its indices. The launch of

BSE-200 Index in 1994 was followed by the launch of BSE-500 Index and 5

sectoral indices in 1999. In 2001, BSE launched the BSE-PSU Index,

DOLLEX-30 and the country's first free-float based index - the BSE TECk

Index taking the family of BSE Indices to 13.

The Exchange also disseminates the Price-Earnings Ratio, the Price to Book

Value Ratio and the Dividend Yield Percentage on day-to-day basis of all its

major indices.

The values of all BSE indices (except the Dollar version of indices) are

updated every 15 seconds during the market hours and displayed through the

BOLT system, BSE website and news wire agencies.

All BSE-Indices are reviewed periodically by the "Index Committee" of the

Exchange. The committee frames the broad policy guidelines for the

development and maintenance of all BSE indices. The Index Cell of the

Exchange carries out the day to day maintenance of all indices and conducts

research on development of new indices.

39

LISTING OF SECURITIES

Listing means admission of the securities to dealings on a recognised stock

exchange. The securities may be of any public limited company, Central or

State Government, quasi-governmental and other financial

institutions/corporations, municipalities, etc.

The objectives of listing are mainly to :

provide liquidity to securities;

mobilize savings for economic development;

protect interest of investors by ensuring full disclosures.

The Exchange has a separate Listing Department to grant approval for listing

of securities of companies in accordance with the provisions of the

Securities Contracts (Regulation) Act, 1956, Securities Contracts

(Regulation) Rules, 1957, Companies Act, 1956, Guidelines issued by SEBI

and Rules, Bye-laws and Regulations of the Exchange.

A company intending to have its securities listed on the Exchange has to

comply with the listing requirements prescribed by the Exchange. Some of

the requirements are as under: -

40

1. Minimum Listing Requirements for new companies

2. Minimum Requirements for companies delisted by this Exchange

seeking relisting of this Exchange

3. Minimum Requirements for companies delisted by this Exchange

seeking relisting of this Exchange

4. Permission to use the name of the Exchange in an Issuer

Company's prospectus

5. Submission of Letter of Application

6. Allotment of Securities

7. Trading Permission

8. Requirement of 1% Security

9. Payment of Listing Fees

10.Compliance with Listing Agreement

11."Z" Group

12.Cash Management Services (CMS) - Collection of Listing

Fees 

41

42

[I] MINIMUM LISTING REQUIREMENTS FOR NEW COMPANIES

(A) Minimum Capital:

1. New companies can be listed on the Exchange, if their issued &

subscribed equity capital after the public issue is Rs.10 crores. In

addition to this the issuer company should have a post issue networth

(equity capital + free reserves excluding revaluation reserve) of Rs.20

crores.

2. For new companies in high technology ( i.e. information technology,

internet, e-commerce, telecommunication, media including

advertisement, entertainment etc.) the following criteria will be

applicable regarding threshold limit:

i. The total income/sales from the main activity, which should be

in the field of information technology, internet, e-commerce,

telecommunication, media including advertisement,

entertainment etc. should not be less than 75% of the total

income during the two immediately preceding years as certified

by the Auditors of the company.

ii. The minimum post-issue paid-up equity capital should be Rs.5

Crores.

43

iii. The minimum market capitalisation should be Rs.50 Crores.

(The capitalisation will be calculated by multiplying the post

issue subscribed number of equity shares with the Issue price).

iv. Post issue networth ( equity capital + free reserves excluding

revaluation reserve) of Rs.20 Crores.

(B) MINIMUM PUBLIC OFFER:

As per Rule 19(2) (b) of the Securities Contracts (Regulation) Rules, 1957,

securities of a company can be listed on a Stock Exchange only when at

least 25% of each class or kind of securities is offered to the public for

subscription.

In case of IPOs by unlisted companies in the IT & entertainment sector, at

least 10% of the securities issued by the company may be offered to the

public subject to the following:

Minimum 20 lac securities are offered to the public (excluding

reservation, firm allotment and promoters contribution)

The size of the offer to the public is minimum 50 crores.

44

For this purpose, the term "offered to the public" means only the portion

offered to the public and does not include reservations of securities on firm

or competitive basis.

SEBI may, however, relax this condition on the basis of recommendations of

stock exchange(s), only in respect of a Government company defined under

Section 617 of the Companies Act, 1956.

[II] MINIMUM LISTING REQUIREMENTS FOR COMPANIES

LISTED ON OTHER STOCK EXCHANGES

The Governing Board of the Exchange at its meeting held on 6th August,

2002 amended the direct listing norms for companies listed on other Stock

Exchange(s) and seeking listing at BSE. These norms are applicable with

immediate effect.

1. The company should have minimum issued and paid up equity capital

of Rs. 3 crores.

2. The Company should have profit making track record for last three

years. The revenues/profits arising out of extra ordinary items or

income from any source of non-recurring nature should be excluded

while calculating distributable profits.

3. Minimum networth of Rs. 20 crores (networth includes Equity capital

and free reserves excluding revaluation reserves).

4. Minimum market capitalisation of the listed capital should be at least

two times of the paid up capital.

45

5. The company should have a dividend paying track record for the last 3

consecutive years and the minimum dividend should be at least 10%.

6. Minimum 25% of the company's issued capital should be with Non-

Promoters shareholders as per Clause 35 of the Listing Agreement.

Out of above Non Promoter holding no single shareholder should hold

more than 0.5% of the paid-up capital of the company individually or

jointly with others except in case of Banks/Financial

Institutions/Foreign Institutional Investors/Overseas Corporate Bodies

and Non-Resident Indians.

7. The company should have at least two years listing record with any of

the Regional Stock Exchange.

8. The company should sign an agreement with CDSL & NSDL for

demat trading.

[III] Minimum Requirements for companies delisted by this Exchange

seeking relisting of this Exchange

The companies delisted by this Exchange and seeking relisting are required

to make a fresh public offer and comply with the prevailing SEBI's and

BSE's guidelines regarding initial public offerings.

[IV] Permission to use the name of the Exchange in an Issuer Company's

prospectus

46

The Exchange follows a procedure in terms of which companies desiring to

list their securities offered through public issues are required to obtain its

prior permission to use the name of the Exchange in their prospectus or offer

for sale documents before filing the same with the concerned office of the

Registrar of Companies. The Exchange has since last three years formed a

"Listing Committee" to analyse draft prospectus/offer documents of the

companies in respect of their forthcoming public issues of securities and

decide upon the matter of granting them permission to use the name of

"Bombay Stock Exchange Limited" in their prospectus/offer documents. The

committee evaluates the promoters, company, project and several other

factors before taking decision in this regard.

[V] SUBMISSION OF LETTER OF APPLICATION

As per Section 73 of the Companies Act, 1956, a company seeking listing of its securities

on the Exchange is required to submit a Letter of Application to all the Stock Exchanges

where it proposes to have its securities listed before filing the prospectus with the

Registrar of Companies.

[VI] ALLOTMENT OF SECURITIES

As per Listing Agreement, a company is required to complete allotment of

securities offered to the public within 30 days of the date of closure of the

subscription list and approach the Regional Stock Exchange, i.e. Stock

Exchange nearest to its Registered Office for approval of the basis of

allotment.

47

In case of Book Building issue, Allotment shall be made not later than 15

days from the closure of the issue failing which interest at the rate of 15%

shall be paid to the investors.

[VII] TRADING PERMISSION

As per Securities and Exchange Board of India Guidelines, the issuer

company should complete the formalities for trading at all the Stock

Exchanges where the securities are to be listed within 7 working days of

finalisation of Basis of Allotment.

A company should scrupulously adhere to the time limit for allotment of all

securities and dispatch of Allotment Letters/Share Certificates and Refund

Orders and for obtaining the listing permissions of all the Exchanges whose

names are stated in its prospectus or offer documents. In the event of listing

permission to a company being denied by any Stock Exchange where it had

applied for listing of its securities, it cannot proceed with the allotment of

shares. However, the company may file an appeal before the Securities and

Exchange Board of India under Section 22 of the Securities Contracts

(Regulation) Act, 1956.

48

[VIII] REQUIREMENT OF 1% SECURITY

The companies making public/rights issues are required to deposit 1% of

issue amount with the Regional Stock Exchange before the issue opens. This

amount is liable to be forfeited in the event of the company not resolving the

complaints of investors regarding delay in sending refund orders/share

certificates, non-payment of commission to underwriters, brokers, etc.

[IX] PAYMENT OF LISTING FEES

All companies listed on the Exchange have to pay Annual Listing Fees by

the 30th April of every financial year to the Exchange as per the Schedule of

Listing Fees prescribed from time to time.

The schedule of listing fees for the year 2004-2005, prescribed by the

Governing Board of the Exchange and approved by the Securities and

Exchange Board of India is given hereunder:

49

SCHEDULE OF LISTING FEES FOR THE YEAR 2005-2006

Sr.

No.Particulars

Amount

(Rs.)

1 Initial Listing Fees 20,000

2Annual Listing Fees

(i) Companies with paid-up capital* upto Rs. 5 crores

(ii) Above Rs. 5 crores and upto Rs. 10 crores

(iii) Above Rs. 10 crores and upto Rs. 20 crores

10,000

15,000

30,000

3 Companies which have a paid-up capital* of more than Rs.

20 crores will pay additional fee of Rs. 750/- for every

increase of Rs. 1 crores or part thereof.

4 In case of debenture capital (not convertible into equity

shares) of companies, the fees will be charged @ 25% of the

fees payable as per the above mentioned scales.

*Includes equity shares, preference shares, fully convertible debentures, partly

convertible debenture capital and any other security which will be converted into equity

shares.

50

[X] COMPLIANCE WITH LISTING AGREEMENT

The companies desirous of getting their securities listed are required to enter

into an agreement with the Exchange called the Listing Agreement and they

are required to make certain disclosures and perform certain acts. As such,

the agreement is of great importance and is executed under the common seal

of a company. Under the Listing Agreement, a company undertakes,

amongst other things, to provide facilities for prompt transfer, registration,

sub-division and consolidation of securities; to give proper notice of closure

of transfer books and record dates, to forward copies of unabridged Annual

Reports and Balance Sheets to the shareholders, to file Distribution Schedule

with the Exchange annually; to furnish financial results on a quarterly basis;

intimate promptly to the Exchange the happenings which are likely to

materially affect the financial performance of the Company and its stock

prices, to comply with the conditions of Corporate Governance, etc.

The Listing Department of the Exchange monitors the compliance of the

companies with the provisions of the Listing Agreement, especially with

regard to timely payment of annual listing fees, submission of quarterly

results, requirement of minimum number of shareholders, etc. and takes

penal action against the defaulting companies.

[XI] "Z" Group

The Exchange has introduced a new category called "Z Group" from July

1999 for companies who have not complied with and are in breach of

51

provisions of the Listing Agreement. The number of companies placed under

this group as at the end of May, 2001 was 1,475.

The number of companies listed at the Exchange as at the end of May 2001

was 5,874. This is the highest number among the Stock Exchanges in the

country and in the world.

New Direct Listing norms

The Governing Board of the Exchange at its meeting held on 6th August,

2002 amended the direct listing norms for companies listed on other Stock

Exchange(s) and seeking listing at BSE. These norms are applicable with

immediate effect.

1. The company should have minimum issued and paid up equity capital

of Rs. 3 crores.

2. The Company should have profit making track record for last three

years. The revenues/profits arising out of extra ordinary items or

income from any source of non-recurring nature should be excluded

while calculating distributable profits.

3. Minimum networth of Rs. 20 crores (networth includes Equity capital

and free reserves excluding revaluation reserves).

4. Minimum market capitalisation of the listed capital should be at least

two times of the paid up capital.

5. The company should have a dividend paying track record for the last 3

consecutive years and the minimum dividend should be at least 10%.

6. Minimum 25% of the company's issued capital should be with Non-

Promoters shareholders as per Clause 35 of the Listing Agreement.

52

Out of above Non Promoter holding no single shareholder should hold

more than 0.5% of the paid-up capital of the company individually or

jointly with others except in case of Banks/Financial

Institutions/Foreign Institutional Investors/Overseas Corporate Bodies

and Non-Resident Indians.

7. The company should have at least two years listing record with any of

the Regional Stock Exchange.

8. The company should sign an agreement with CDSL & NSDL for

demat trading.

[XII] CASH MANAGEMENT SERVICES (CMS) - COLLECTION OF

LISTING FEES

As a further step towards simplifying the system of payment of listing fees,

the Exchange has entered into an arrangement with HDFC Bank for

collection of listing fees, from 141 locations, situated all over India. Details

of the HDFC Bank branches, are available on our website site

www.bseindia.com as well as on the HDFC Bank website

www.hdfcbank.com The above facility is being provided free of cost to the

Companies.

Companies intending to utilise the above facility for payment of listing fee

would be required to furnish the information, (mentioned below) in the Cash

Management Cash Deposit Slip. These slips would be available at all the

HDFC Bank centres.

53

COMPARISON OF LISTING FEES

BSE NSE

Initial Listing Fees

Rs.20, 000 Rs.7, 500

Annual Listing Fees

Companies with paid up share and/or debenture capital:

Up to Rs. 5 crores10,000

Of Rs.1 crore 4,200

Above Rs.1 crore and

up to Rs.5 crores8,400

Above Rs. 5 crores

and up to Rs. 10

crores

15,000Above Rs.5 crores and

up to Rs.10 crores14,000

Above Rs. 10

crores and up to

Rs. 20 crores

30,000Above Rs.10 crores

and up to Rs.20 crores28,000

Above 20 crores

Additional fee of Rs.

750/- for every increase

of Rs. 1 crores or part

thereof.

Above Rs.20 crores

and up to Rs.50 crores42,000

Above Rs.50 crores 70,000

54

The comparison of INITIAL LISTING FEES is shown in the chart:-1

Initial Listing Fees (In Rs.)

NSE BSE

7,500 20,000

With the help of these charts we can simplify the comparison of listing fees.

These charts depict that listing fees on NSE is much lower than on BSE.

55

BIBLIOGRAPHY

WEBSITES

www.managementguru.com

www.nseindia.com

www.bse.com

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