' The Supreme Court of Pakistan in its judgment, dated 3rd September, 1990 while upholding the earlier judgment of Lahore High Court, dated 10th April, 1990 (although on grounds different from those on the basis of which the judgment of Lahore High Court had been passed) directed that the registration granted to Mr. Amanullah Khan and his associates for establishment of a new stock exchange at Islamabad under the Securities and Exchange Ordinance 1969, should not be allowed to them and that all the applications shall be considered afresh in accordance with the law on the subject by the competent authority. The order of the Supreme Court of Pakistan, in my view, amounts to remanding of the case to the competent authority.
2. Securities and Exchange Ordinance, 1969 which is the relevant law in the case does not require a detailed order to be passed by the competent authority while disposing of applications for registration. Section 5 (3) of the Ordinance merely provides that no application for registration shall be refused except after giving the applicant an opportunity of being heard. However, I am making a detailed order in view of the fact that this is the fiRs,t case of its kind in which dispute relating to registration of stock exchange arose among interested parties and the matter was brought before the superior Courts of the country and the coverage which it has received in the press. While writing this order, I have taken the opportunity of making certain observations on the inadequacy of the existing law governing establsihment of a new stock exchange so that steps are taken to provide a comprehensive legal framework to cope with similar situations likely to arise in the future.
3. In view of certain observations made in the judgment of the Supreme Court, Corporate Law Authority, after announcement of the judgment, undertook to introduce a comprehensive and standardised procedure for establishment of stock exchanges in the country which might render the process of decision-making transparent. The Authority prepared guidelines for the establishment of stock exchanges covering such areas as the number of stock exchanges to be allowed in a city, mode of inviting and submission of applications, composition of membeRs,hip representing various interests, management, qualifications of membeRs,, membeRs,hip fee and transfer of membeRs,hip. The criteria was advertised in the press in December 1990 and applications were invited alongwith fee of Rs,200,000. Those who had already submitted applications were advised to revise their applications so as to meet the requirements of the criteria and to remit fee of Rs,2,00,000. In response to the advertisement, only Raja Abdul Rahman sent a fresh application. Mr. Amanullah Khan sent revised list of promoteRs, to meet the requirements of criteria and remitted the fee of Rs,200,000. Mr Muhammad Iqbal Zaki sought clarifications which were furnished. However, he neither revised his earlier application nor remitted any fee.
4. Syed Sarmad Maqsood Al-Hussainy who was one of the earlier candidates objected to the criteria and eliciting of fresh applications in the case of Islamabad Stock Exchange as in his opinion, the new criteria could not be applied in the case of a stock exchange whose case had been remanded by the Supreme Court to Corporate Law Authority and the application submitted by him and his associates was complete in all respects according to the law and rules then in force. Mr. Hussainy maintained that any new rules to be framed for the establishment of stock exchanges in the country could not be given retrospective effect. He also argued that his application which had been submitted in -July, 1990 cannot be termed as incomplete, without fee of Rs,200,000 (non-refundable) and for not complying with other conditions of the new criteria. The case was referred to Justice Division for advice which opined that the criteria framed by Corporate Law Authority did not have any legal sanctity as it had not been incorporated iv the Securities and Exchange Rules, 1971 by way of amendment. Justice Division also advised that Corporate Law Authority may consider the original application of Mr. Hussainy alongwith other applications if it otherwise met the requirements of the Ordinance. In view of this advice, we stopped further process of eliciting fresh applications or getting the original applications revised. It was accordingly decided to consider, only those applications which had been originaly received.
5. The Supreme Court has in its judgment dated 3-9-1990 directed that all the applications shall be considered afresh in accordance with the law on the subject by the competent' authority. It is therefore essential to address ouRs,elves to the following questions:
(a) Which applications have to be considered afresh?
(b) Which law is applicable in this case?
(c) Who is the competent authority to decide the case?
6. As regards the applications which should be considered by the competent authority, my interpretation of the judgment of the Supreme Court is that all applications which had been received by the Authority should be considered. Securities and Exchange Ordinance, 1969 provides that a stock exchange which is eligible for registration may apply to the Government for registration. There is no legal requirement for making public announcement inviting proposals from the public and fixing a date by which such applications should be received. In the present case, all applications received by the Authority have been considered. The details of the applicants alongwith the dates of their receipt on the prescribed form are mentioned below in chronological order:-
(1) Mr. Sarmad Maqsood Al-Hussainy and Associates 30-1-1989
(2) Mr. Amanullah Khan and Associates. 2-2-1989
(3) Mr. Mohammad Iqba Zaki and Associates 24-6-1989
(4) Chaudhry Mohammad Aslam and Associates 26-8-1989
(5) Raja Abdul Rehman and Associates 28-11-1989.
7. All the applicants were afforded an opportunity of being heard. However, Chaudhry Muhammad Aslam informed vide his letter, dated 28th April, 1991 that he was no more a candidate for registration as he had joined the group led by Mr. Amanullah Khan. As such only 4 applications have been considered. The provisions of the law suggest that each application should be disposed of as and when it has been received and processed. In the present case, however, 4 applications which had been received by Corporate Law Authority at different dates have been, in view of the peculiar background of the case, considered together which necessarily involved their comparative evaluation.
8. The legal provisions which govern the establishment of a stock exchange in Pakistan are to be found in sections 3, 4 and 5 of the Securities and Exchange Ordinance, 1969 and rule 3 of the Securities and Exchange Rules, 1971. The salient features of these provisions are summarised below:-
(i) No stock exchange can operate or carry out its functions nor can any peRs,on use facilities of its services for the purposes of making transactions without registration of the stock exchange. A stock exchange (or sponsoRs, of a company proposing to establish a stock exchange) can be allowed registration by the Government if it fulfils such conditions or .Comply with such requirements as may be prescribed to ensure fair dealings and to protect investoRs,
(ii) The competent authority while allowing registration may prescribe any conditions or requirements (in order to ensure fair dealings and protection of investoRs,). These conditions or requirements may among other matteRs, relate to:
(a) qualification for membeRs,hip and admission, exclusion, suspension, expulsion and re- admission of membeRs, therein to or therefrom;
(b) constitution and poweRs, of the governing body and the poweRs, and duties of the office- beareRs,;
(c) representation of the Central Government on the governing body of a stock exchange or any of its committees;
(d) the manner in which business should be transacted including restrictions on the business of the membeRs,;
(e) Memorandum and Articles of association, rules, regulations and bylaws of a stock exchange; and
(f) the maintenance of accounts, including those of membeRs,, and their audit.
(iii) The competent authority may grant the certificate of registration to a stock exchange if it is satisfied that it is in the interest of trade to register the stock exchange.
(iv) The competent authority shall not refuse registration of a stock exchange except after giving the applicant an opportunity of being heard.
(v) The basic qualifications of membeRs,hip of the stock exchange (which would also apply to the sponsoRs, of a new stock exchange as they would also be membeRs, of this stock exchange) have been mentioned C in rule 3 of the Securities and Exchange Rules, 1971.
9. The legal framework relating to the establishment of a new stock exchange as mentioned above has been used only once at the time of the establishment of the Lahore Stock Exchange in 1971 when there was only one application before the then competent Authority namely, Securities and Exchange Authority of Pakistan. Unfortunately the existing legal framework does not fully cover and answer questions which have arisen in the present case. The competent Authority in the present case is required to consider the competitive claims of four parties for registration of the stock exchange and his task would have been easier if the law provided a reasonable detailed criteria.
10. The law relating to establishment of stock exchanges in Pakistan is not different from such laws in other countries probably because such laws had been framed at a time when securities markets in respective countries had not been developed and normally a single party applied for registration of a stock exchange. In many countries, stock exchanges evolved over a long period of time and continued to operate without registration under the law. For instance, origins of New York Stock Exchange go back to almost the last quarter of the eighteenth century but the Securities Exchange Act which requires registration was promulgated in 1934. In India, Securities Contracts (Regulation) Act, 1956 and the Securities Contracts (Regulation) Rules, 1956, which govern establishment of stock exchanges do not provide clear cut criteria in the light of which competing applications could be considered for recognition. Absence of adequate professions in the Indian law has resulted in difficulties in awarding recognition in case there are more than one applicant.
Recently, a dispute somewhat similar to that of Islamabad Stock Exchange arose in the case of recognition of Coimbatore Stock Exchange in India. According to Press reports, two rival groups, one of which is supported by the Indian Chamber of Commerce and Industry have been asserting their claims for - the stock exchange at Coimbatore. The dispute has gone before the Madras High Court which, according to the press reports, has referred the parties to the Union Government which is competent to take decision under the Securities Contracts (Regulation) Act, 1956 after making necessary enquiries and hearing the parties.
11. In the absence of a well-defined criteria for evaluation of competing applicants for registration of a stock exchange, I am of the view that weightage may be given to the capability of the applicants to establish physical facilities required by a stock exchange. One may have to judge the degree of motivation of the applicants for establishment of such facilities. I hold this quality as the most important as other requirements of the stock exchange like measures to ensure fair dealings and protection of interests of investoRs, can be met through imposition of conditions at the time of grant of registration by the competent Authority and the approval of the rules of the stock exchange by the Corporate Law Authority, as a matter of fact, the responsibility for ensuring fair dealing and protection of investoRs, rests with the regulatory bodies.
12. As regards the determination of the competent Authority for the purposes of this case, section 28 of the Securities and Exchange Ordinance, 1969 provides that the Central Government may by Notification in official Gazette direct that all or any of its poweRs, and functions in this Ordinance may, subject to such limitations, restrictions or conditions, if any, as it may from time to time impose be exercised or performed also by officer or authority subordinate to it or specially appointed for the purpose. A Notification relating to delegation of poweRs, to Member, Corporate Law Authority, issued vide SRO 1024 (1)/81 by the Central Government, dated 10th September, 1981 is reproduced below:- "In exercise of the poweRs, conferred by section 28 of the Securities and Exchange Ordinance, 1969 (XVII of 1969) and in supeRs,ession of the Ministry of Finance Notification No, SRO 261 (I)/70, dated 26th October, 1970, the Federal Government is pleased to direct that all E poweRs, and functions of the Federal Government under the said Ordinance, other than those under sections 26, 27, 28, 29 and so much of section 33 thereof as relates to the making of rules for regulation of the business mentioned in section 32 thereof, shall, subject to such directions relating to questions of policy as may be issued from time to time by the Federal Government, be exercised or performed also by the Member, Corporate Law Authority (Corporate Law Wing)."
' According to the above-mentioned notification, Member, Corporate Law Authority (Corporate Law Wing) is competent to allow registration under. Section 5 of Securities and Exchange Ordinance.
PoweRs, of review and revision of the order passed by Member, Corporate Law Authority vest with the Chairman, Corporate Law Authority under notification issued vide SRO 1023 (I)/81 by the Central Government.
13. As directed by the Supreme Court of Pakistan, I have considered all the pending applications (which are 4) seeking grant . Of certificate of registration, afresh. As already mentioned, the fifth applicant, namely Chaudhry Muhammad Aslam withdrew his application.
14. After receipt of applications, Corporate Law Authority had asked the applicants to furnish their detailed proposals regarding the manner in which they proposed to set up the stock exchange.
They were asked to furnish information covering the following:-
(i) Financial means of each promoter with bank references.
(ii) Experience of each promoter in the field of securities business.
(iii) Which of the promoteRs, intended to work as whole time active membeRs, (stock brokeRs,).
(iv) Estimated cost in the establishment of the proposed exchange at Islamabad and the annual recurring expenditures.
(v) Details of the facilities proposed to he provided in the proposed stock exchange alongwith time framework.
(vi) Sources of financing of the initial cost and the recurring cost.
(vii) In case listing of companies on the proposed stock exchange at Islamabad is to become optional, the manner in which the promoteRs, planned to attract companies for enlistment.
(viii) The means proposed to be adopted by the promoteRs, to educate the public of the region regarding investment in securities. Plans of the promoteRs,, if any, to encourage peRs,ons of the region to work as stock brokeRs,
(x) Plans, if any, to maintain ratio between active and inactive membeRs, of the proposed stock exchange.
15. The main features of the proposals regarding the establishment of the stock exchange received from four applicants arc mentioned below:- ' Syed Sarmad Maqsood Al-flussainy and Associates.
' Ways and means to attract companies for listing and providing facilities etc. ' Establish computer network. Publish ready board quotations.
' Provide dedicated line, telex service, Fax.
' Companies listed on other exchanges to be exempted from initial listing fee.
' Organise seminaRs, and lectures. Publish hand-book on investment. Information relating to the project (projections): Initial capital cost Rs,497,310 Annual income Rs,1,205,000.
Recurring expenditure Rs,1,138,000 MembeRs,hip fee Rs,100,000 Construct own building Amanullah Khan and Associate s. Ways and means to attract th e companies for listing and providing facilities: Charge listing fee at reduced rates 50% of fee charged by KSE/LSE.
(ii) Provide research facilities for listed companies.
(iii) Publish ready board quotations.
(iv) Organise seminaRs, and lectures.
(v) Publish material for educating investoRs,
(vi) Train and develop financial expertise relating to capital market. (b) Information relating to the project (projections)
(i) Initial capital cost Ist year Rs,560,000
(ii) Recurring cost rs2,123,00 (Rs,1,476,000 being rent)
(iii) Income from initial Rs,600,000 listing fee
(iv) Annual fee estimated 2nd Rs,620,000 year (60% of rate of KSE/LSE)
(v) MembeRs,hip fee Rs, 100,000
(vi) Construct own building
(iii) Muhammad Iqbal Zaki and Associates.
(a) Ways and means to attract companies listing and providing of facilities:
(i) Induce and convince companies within the area of influence to get enlisted.
(ii) Subject specialists to be engaged for organising seminaRs,, publication of brochures and literature.
(b) Information relating to the project (Projections):
(i) Cost of establishment Rs,500,000
(ii) Recurring cost per Rs,550,000 annum
(iii) SponsoRs, to contribute initial cost and also accept donations
(iv) Recurring cost to be met from membeRs,hip fees, enlistment fees; donations, fines, profits from facilities and loans from the exchange.
(v) MembeRs,hip fee Rs,10,000
(iv) Raja Abdul Rehman and Associates ' In spite of repeated requests he has not been able to furnish information mentioned at para 14 while other applicants had furnished the As required by section 5 of Securities and Exchange Ordinance, 1969, ' I invited all the applicants for hearing and they were heard on the following dates:-
(i) Mr. Muhammad Iqbal Zaki 26th May, 1991
(ii) Mr. Amanullah Khan 28th May, 1991
(iii) Syed Sarmad Maqsood 29th May, 1991 Al-Hussainy
(iv) Raja Abdul Rehman 10th June, 1991
17. During the hearings, I explained to each of them the background of the case and the reasons for their being invited for fresh hearing. They were asked to explain their proposals and claims, in addition to whatever had been mentioned in the applications. All of them asserted their respective claims. However, no additional point of any significance was put forth.
18. A question which may agitate the minds of the public is as to what could be the possible reasons for rather extraordinary interest being shown by applicants for promoting the establishment of a stock exchange at Islamabad which will be a company limited by guarantee (whose profits are not distributable) and whose sponsoRs, shall have to put in considerable efforts to raise the necessary infrastructure. There are different views on this subject. While some quarteRs, think that registration would give a particular group impotence in the financial and commercial circles as well as voice on the policy making otheRs, refer to expectations of financial gain. It is argued that the group obtaining registration is likely to exercise patronage in the selection and admission of membeRs, who may earn windfall profits on the sale of membeRs,hip. In this regard, exceptionally high prices of membeRs,hip cards obtaining at Karachi and Lahore Stock Exchanges is being mentioned. I' consider it essential that those receiving permission to establish a stock exchange shquld not use this permission for their financial advancement. A stock exchange is an important financial institution whose sponsoRs, should be primarily motivated by professional considerations. In the latter part of my order, I have suggested certain conditions to be imposed with the objective of ensuring that the Stock Exchange at Islamabad is established in a professional manner. I am confident that some of the conditions will provide a guard against excessive discretion in the selection of new membeRs, and temptation to use membeRs,hip for financial gains.
18-A.I have given careful consideration to the question as to which applicant or applicants may be granted permission for establishment of the stock exchange at Islamabad. Following options are available with me in this case:-
(i) one of the four applicants may be granted permission;
(ii) two or more applicant groups may be advised to join hands;
(iii) all the four applications may be rejected, if none is found to be eligible.
19. According to sections 4 and 5 of the Securities and Exchange Ordinance, the competent Authority is required to take action on the applications having regard to the interest of the trade as well as public interest.
20. I have to decide as to which can be the best possible couRs,e that may ensure successful establishment of a stock exchange at Islamabad for which announcement has already been made by the Government. In my view the objective can be achieved by selecting a single party having a strong sense of a commitment to the task.
21. Analysis of the composition of the 4 groups is as under:-Mr. Sarmad Maqsood Al-Hussainy and Associates.
' The group consists of 17 peRs,ons, 12 of whom are membeRs,of Lahore Stock Exchange (LSE) and 2 are membeRs, of Karachi Stock Exchange (KSE). In addition, 2 sponsoRs, happen to be secretaries of KSE and LSE respectively. As such, the group has intensive experience of dealing in the securities market. The main weakness of the group is non-representation from Islamabad/Rawalpindi as well as absence of sufficient number -of peRs,ons representing industry and trade. Mr. Amanullah Khan and Associates.
' The group consists of 10 peRs,ons out of whom 5 are industrialists of Rawalpindi/Islamabad area, while 2 peRs,ons are local businessmen. One of the sponsoRs, is a chartered accountant from Islamabad while the remaining 2 belong to Karachi. One of whom is an industrialist and other namely, Mr. Ferozudin A. Cassim is a leading stock broker of KSE. Mr. Cassin has long family tradition of dealing in securities and has been President of KSE.
Mr. Muhammad Iqbal Zaki and Associates.
' The group consists of 12 peRs,ons out of whom, 7 peRs,ons belong to Islamabad while the remaining belong to Lahore. Most of the sponsoRs, are businessmen or contractoRs, Only one peRs,on namely, Mr. Muhammad Abbas has some experience in advising on investment in securities. The group does not have any peRs,on who may have actual experience of stock brokerage. Mr. Abdul Rehman and Associates.
' The group consists of 11 peRs,ons out of whom 4 including Raja Abdul Rehman belong to Azad Jammu and Kashmir, while one each belongs to Jhelum, Lahore, Rawalpindi, Peshawar and Quetta.
Two of them belong to Islamabad/Rawalpindi. While Raja Abdul Rehman is a leading industrialist heading the Raja Group of Industries, the remaining membeRs, of the group are owneRs, of medium to small sized industries and business enterprises. None of the membeRs, has experience of stock brokerage although some of them have experience of investment in securities.
22. Although, Securities and Exchange Ordinance, 1969 and the rules, framed thereunder do not contain any express criteria for comparative evaluation of applicants for registration, in case there may be more than one applicant. I am of the view that the groups led by Mr. Iqbal Zaki and Raja Abdul Rehman have inferior claim on account of the following factoRs,:-
(i) They do not have .Association of any peRs,on having practical H experience of securities market/stock brokerage;
(ii) They do not have association of leading industrialists of businessmen from the area where the stock exchange is to be established.
23. The group headed by Mr. Hussainy although competent to.Establish a stock exchange suffeRs, from absence of any peRs,on from Islamabad/Rawalpindi where the stock exchange is to be established.
24. The group led by Mr. Amanullah Khan consists of leading industrialists and businessmen of the area as well as a professional and a leading stock broker from Karachi. I have reached the conclusion that the group led by Mr. Amanullah Khan and consisting of peRs,ons as mentioned in the original application, dated 22nd February, 1990 should be allowed registration for establishing the stock exchange at Islamabad. Their claim is further strengthened by the following two factoRs,:-
(1) Karachi Stock Exchange which was established in 1949, was promoted by 9 peRs,ons all of whom either belonged to Karachi or were living at Karachi at that time, while all of the ten promoteRs, of Lahore Stock Exchange registered in 1971 either belonged to Lahore or were livings at Lahore at that time. On that analogy and even otherwise, it seems equitable that a group whose membeRs, are pre-dominantly from Islamabad/Rawalpindi may be granted registration particularly when it has a balanced composition of the local industrialists, businessmen, as well as a stock broker
(ii) The group which belongs to Islamabad/Rawalpindi is bound to feel a strong sense of commitment to the establishment of an important financial institution in the area.
25. I may state here that when the proposal for establishment of a stock exchange at Islamabad was under consideration of Coporate Law Authority, I myself was of the opinion (which was expressed in the summary submitted by Mr. Irtiza Hussain, former Chairman, Corporate Law Authority to then Minister of State for Finance on 8th August, 1989) that the groups headed by. Mr. Amanullah and Mr. Al-Hussainy may join hands to achieve a blend of local industrialists and businessm en on the , one hand and peRs,ons having practical experience in securities market on the other hand. However, taking into consideration the developments which have taken place since 1989 like litigation in the Courts as well as failure of efforts for arbitration by certain quarteRs,, I am now of the opinion that it would not be in the interest of the establishment of stock exchange at Islamabad and its smooth working to ask these two groups to join hands. As a matter of fact, prospects of the establishment of stock exchange at Islamabad may be seriously jeopardised if two parties which have been engaged in litigation are asked to jointly establish this exchange.
However, it would be desirable that such membeRs, of the other groups which had applied for registration may become membeRs, of the Islamabad Stock Exchange, if they otherwise meet requirements of membeRs,hip and criteria which I am suggesting in the latter part of the order.
26. Section 4 of the Securities and Exchange Ordinance, 1969 empoweRs, the competent Authority to prescribe any conditions or requirements mainly with the objective of ensuring fair dealings and protection of investoRs, Taking into account usage in this respect, conditions can be prescribed to ensure that the stock exchange to be allowed certificate of registration, should be established ,on healthy basis, capable of meeting the genuine requirements of all the participants in the market. It has to be ensured that the stock exchange to be established becomes a dynamic institution receptive to fresh ideas and well-equipped to meet the changing requirements. Recently, sudden boom in the capital market has been witnessed in our country which is reflected in increased volume of trading and escalation in the general index of share prices. The boom is attributable to the liberalized policies of the Government in respect of sanction of industries and allowing the non- residents access to our secondary market. Controller of Capital Issues has also liberalized policies and procedures governing issue of capital and the most significant step taken is liberalization in the pricing of the shares being issued to the public. Demand for securities has suddenly increased partly because two off-shore funds have been established whose proceeds are being invested in our securities market. This development has posed serious challenges to our stock market institutions as the momentum of development of capital market can be maintained only if in our stock market institutions like under-writing facilities, trading practices and clearing and settlement systems are developed. We have to ensure maximum transparency of transactions in our market, orderly behaviour of share prices and efficient systems of clearing and settlement. The new developments of couRs,e require the Stock Exchanges to have progressive outlook. There was time when stock exchanges operated as clubs. However, the great importance which securities market has assumed as an essential segment of the financial system helping mobilisation of savings and trends towards globalisation of the securities market has changed the concept of securities market in many countries. Today, a stock market has to operate as a financial institution quickly responding to the changing demands.
27. We have experience of the operations of Karachi and Lahore Stock Exchanges and a number of flaws have been noticed in their organisational set up, trading practices, composition of membeRs,hip and the responsibilities of the brokeRs, towards the investoRs, Corporate Law Authority as a regulatory body has been trying to improve the working of the two stock exchanges in different respects. Now, that we are setting up a new stock exchange, it is. Desirable to define the parameteRs, of its establishment so that it may developed as a healthy, progressive and dynamic institution. The conditions being prescribed are expected to achieve the following objective:
(i) to give adequate representation to peRs,ons belonging to the region as well as to certain occupational interest;
(ii) to ensure that membeRs,hip is not used as financial investment but should only enable membeRs,hip to peRs,ons genuinely interested in their association with the institution;
(iii) to ensure that membeRs, possess adequate academic qualifications and have sound financial background;
(iv) to encourage establishment of brokerage houses and induction of institutional membeRs,; and
(v) to provide sufficient financial resources to the stock exchange which is being established as a company limited by guarantee and source of revenue from listing of which is not likely to be substantial in the initial yeaRs,
28. In order to achieve the above mentioned objectives. Following conditions are being prescribed while granting certificate of registration:-
(i) For the fiRs,t five yeaRs,, total membeRs,hip shall not exceed 100.
(ii) MembeRs, shall be drawn from the following categories in the ratio mentioned against each:
(a) Local residents of Rawalpindi Division (Punjab), Tribal Areas Federal Capital Territories of Islamabad, Federal Area Azad Kashmir and N.-W.F.P. 50%
(b) Stock brokeRs, who are membeRs, of other stock exchanges. 25%
(c) Bodies corporate including brokerage houses, investment banks and financial institutions 15%
(d) PeRs,ons having experience in dealing in securities (investoRs, and agents of stock brokeRs,).
10%
(iii) In addition to qualifications laid down in the Securities and Exchange Rules, 1971 a member should fulfil the following qualifications:
(a) should be at least a graduate;
(b) a member of another stock exchange should possess minimum experience of 10 yeaRs,;
(c) should have paid income tax during the last three yeaRs, with minimum assessed income of Rs,100,000. Brokerage houses which may not be three yeaRs, old should be exempted from the requirements.
(iv) The membeRs,hip shall not be transferable through sale for the fiRs,t 10 yeaRs, ' The Exchange shall have whole time Chief Executive who should possess suitable qualifications.
The Chief Executive shall be appointed with the approval of Corporate Law Authority.
(v) The membeRs,hip fee shall be Rs,200,000.
(vi) The Board of DirectoRs, shall consist of 15 peRs,ons out of whom at least six should be active brokeRs,, three should be professionals (Chartered Accountants, lawyeRs,, investment bankeRs,) to be nominated each year by Corporate Law Authority and at least one should be representative of body corporate membeRs,
(vii) The committee to be set up' for selecting new membeRs, should have a representative of Corporate Law Authority.
29. After the announcement of this order, Corporate Law Authority shall undertake review of the legal provisions relating to the establishment of new stock exchanges. The amendments which may be considered necessary would be incorporated in the rules and would be given wide publicity so that those peRs,ons interested in establishment of stock exchanges in other cities should be aware of the policies and procedures. The proposed procedure may also involve the moue of assessing the need for establishment of stock exchange in a particular city. In case any application is received for registration of stock exchanges in other cities, it should spend till the new procedure has been