The United Stock Exchange of India Ltd (USE) and BSE Ltd. have convened separate meetings of their equity shareholders in Mumbai on October 20 to seek their approval for the proposed merger of the former with the latter.
Recently, the Securities and Exchange Board of India and the Competition Commission of India had granted their approval for the proposed merger. Similarly, applications have been filed by them before the Bombay High Court seeking its approval.
As per the merger formula, BSE proposes to issue one equity share of Re.1 each for every 385 equity shares of USE. The share exchange ratio was recommended by S.R. Batliboi & Co LLP. After the amalgamation, the paid-up equity capital of the BSE would increase to 10.73 crore from Rs. 10.57 crore.
Post-merger, the equity holding of institutions and non-institutions in BSE would increase to 57.82 per cent from 56.83 per cent, while that of trading members and their associates would dip from 43.17 per cent to 42.18 cent.
In the explanation statements, BSE and USE said that their board of directors had given their nod for the merger during May. The merger would come into force from April 1, 2014.
According to the EGM notice, USE and BSE are recognised stock exchanges. Currently, there were four stock exchanges in the country that provided trading platform in currency derivatives and interest rate derivatives segment. The BSE started providing trading facility in currency derivative segment since November 2013.
The merger would lead to consolidation of this sector and improve liquidity.
USE is a public limited company incorporated on October 15, 2008. It has a paid-up capital of Rs.154.50 crore of which 14.56 per cent was held by BSE.
The shareholders of USE comprise of 21 nationalised banks, six private banks and one bank based out of India.
For March 2014, USE reported a loss of Rs.3.93 crore against a profit of Rs.46.36 lakh for the corresponding period last year.
