April 17, 2006
SEBI strikes down the ultra-vires resolutions passed by the members of Coimbatore Stock Exchange Ltd.
The members of Coimbatore Stock Exchange Ltd. (CSX) in the Extra-ordinary General meeting held on February 15, 2006 passed a resolution for voluntary surrender of recognition granted to CSX by Securities and Exchange Board of India (SEBI) and to cease to function with immediate effect as a recognized stock exchange within the scope and meaning of Securities Contracts (Regulation) Act, 1956 (SCRA) and the SEBI Act, 1992.
SEBI, after examining the issue, vide letter dated March 17, 2006 advised CSX that the resolution passed in the EGM held on February 15, 2006 cannot be acted upon as the same was ultra vires of the SCRA. However, in spite of the said letter the members passed a resolution adopting the new set of Memorandum and Articles of Association, according to which no person other than a member of the exchange can hold the position of a Director. Consequently, the Public Representative Directors and the SEBI Nominee Director do not find a place in the said Articles of Association.
In view of the above, SEBI has passed an interim order directing CSX to refrain from taking any action pursuant to the resolutions passed at the EGM held on February 15, 2006 & March 31, 2006 and any other decisions that might have been taken without the participation of the Public Representative directors /SEBI Nominee director after the EGM dated February 15, 2006. CSX has also been directed to refrain from transferring or alienating any movable or immovable property of the exchange in any manner whatsoever, till further orders and also not do anything which would have the effect of or which is likely to have the effect of altering the basic contours of the exchange as well as the character of the exchange. Pending hearing and final decision in the matter, the day to day functioning of the exchange would be undertaken by a three member Committee consisting of Shri V Selvaraj, SEBI Nominee Director / ROC, who will be the member chairman of the said committee and Shri C. A. Venkatesan and Shri K. R. Raman, Public Representative Directors.
The Order has been passed by Shri G.Anantharaman, Whole Time Member, SEBI on April 17, 2006.
April 17, 2006