Sebi withdraws recognition to HSE

Sebi has withdrawn the recognition granted to the Hyderabad Stock Exchange Ltd as the bourse failed to dilute the mandated 51 per cent stake to non-brokers by August 28. "The exchange had failed to dilute 51 per cent of its equity share capital to the public other than shareholders having trading rights on or before August 28, 2007," the Sebi said.
The regulator said that in terms of Section 5(2) of the Securities Contracts (Regulation) Act, 1956, the recognition granted to HSE "stands withdrawn with effect from August 29, 2007." The Sebi had notified the Hyderabad Stock Exchange Ltd. (Corporatisation and Demutualisation) Scheme on August 29, 2005.
The SCRA stipulates that every recognised stock exchange whose scheme for corporatisation and demutualisation has been approved by Sebi shall ensure that at least fifty-one cent of its equity share capital is held by the public other than shareholders having trading rights (that is the borkers) , within 24 from the date of publication of the scheme. The HSE has failed to attract investors due a pending case in the AP HC over 17,000 square yard land, where the HSE building is situated. The land violates AP Urban Land Ceiling Act.
According to HSE director T.S. Rao, "The HSE had fixed the price at Rs 450 per share, but they could not convince investors about the value of the shares due to the litigation over Rs 200 crore worth land. Out of 30 lakh shares of HSE, 71 per cent of shareholders were ready to sell their stake."