Mumbai: A writ petition filed in the Bombay High Court has alleged that the shareholding pattern of the Bombay Stock Exchange (BSE) violates laws pertaining to use of public money and that 26% of BSE shares are with six foreign companies. The BSE and the Securities and Exchange Board of India (SEBI) are being made respondents in the petition.
The petition, filed by Shaukat Ali M. Betgeri, a social worker and Kiran B Mehta, shareholder of BSE Ltd, claims that the aforesaid exercise was done ignoring the law, and to benefit certain private individuals and entities. The petition is likely to come up for hearing in coming week.
According to the petition, a scheme of corporatisation and demutualisation of BSE Ltd was sanctioned by SEBI, vide notification dated May 20, 2005. Under the scheme, BSE Ltd was required to dilute its 51% stake to the public within 12 months from the date of the order under section 4(B)8 of Securities Contracts (Regulation) Act, 1956 (SCRA).
The petitioners have mentioned that in the said 51%, BSE Ltd includes the shareholding of Singapore Exchange Ltd (3,86,111 shares, approximately 5%), Deutsche Boerse AG (3,86,111 shares, approximately 5%), Atticus Mauritius Ltd (3,08,888 shares, approximately 4%), Caldwell Asset Management Inc (3,08,888 shares, approximately 4%), Dubai Financial LLC (3,08,888 shares, approximately 4%) and Katriel Investments Ltd (3,08,888 shares, approximately 4%) which adds up to 26%. “These entities do not fall within the scope and ambit of public,” said the petition.
The BSE, on its part, has vehemently denied the allegations, and has brought into question the reputation of the petitioners, according to a response received by The Hindu. "The allegations are frivolous in nature," the BSE replied. “The shareholding pattern is public knowledge and was published in the IPO prospectus of the BSE. These allegations seem to be made by a group of people associated with a defaulter broker to malign BSE's reputation. They had made similar allegations in the past to stop the BSE IPO from taking place. However, they were not successful."
Vishwas Utagi, co-convener of Trade Unions Joint Action Committee, which is working along with the petitioners on the case, said, “In spite of gross illegalities, the SEBI issued a notification dated June 29, 2007, declaring that the BSE Ltd had complied with conditions of scheme as required under SCRA. However, SEBI ought to have rejected this wrongful and illegal dilution of 51% stake, and should have cancelled and rejected the scheme of corporatisation and demutualisation of BSE Ltd.”
The petition says that the misuse of word ‘public’ by interpreting it as public being persons/entities other than Indian citizens/residents, has resulted in substantial loss to the people of India for whose benefit the SCRA was enacted. The petition has demanded a Special Investigation Team (SIT) to be appointed by the High Court to probe the alleged illegalities.
