þÿ

Download A GRAND PROJECT REPORT ON

“FOREIGN EXCHANGE And RISK MANAGEMENT”

(In partial fulfillment of award of MBA degree)

Objective of the study

MAIN OBJECTIVE

This project attempt to study the intricacies of the foreign exchange market. The main purpose of this study is to get a better idea and the comprehensive details of foreign exchange risk management. SUB OBJECTIVES  To know about the various concept and technicalities in foreign exchange.  To know the various functions of forex market.  To get the knowledge about the hedging tools used in foreign exchange. LIMITATIONS OF THE STUDY
  

Time constraint. Resource constraint. Bias on the part of interviewers.

DATA COLLECTION  The primary data was collected through interviews of professionals and observations.  The secondary data was collected from books, newspapers, other publications and internet. DATA ANALYSIS The data analysis was done on the basis of the information available from various sources and brainstorming.

INTRODUCTION
FOREIGN EXCHANGE MARKET OVERVIEW In today’s world no economy is self sufficient, so there is need for exchange of goods and services amongst the different countries. So in this global village, unlike in the primitive age the exchange of goods and services is no longer carried out on barter basis. Every sovereign country in the world has a currency that is legal tender in its territory and this currency does not act as money outside its boundaries. So whenever a country buys or sells goods and services from or to another country, the residents of two countries have to exchange currencies. So we can imagine that if all countries have the same currency then there is no need for foreign exchange. Need for Foreign Exchange Let us consider a case where Indian company exports cotton fabrics to USA and invoices the goods in US dollar. The American importer will pay the amount in US dollar, as the same is his home currency. However the Indian exporter requires rupees means his home currency for procuring raw materials and for payment to the labor charges etc. Thus he would need exchanging US dollar for rupee. If the Indian exporters invoice their goods in rupees, then importer in USA will get his dollar converted in rupee and pay the exporter. From the above example we can infer that in case goods are bought or sold outside the country, exchange of currency is necessary. Sometimes it also happens that the transactions between two countries will be settled in the currency of third country. In that case both the countries that are transacting will require converting their respective currencies in the currency of third country. For that also the foreign exchange is required. About foreign exchange market. Particularly for foreign exchange market there is no market place called the foreign exchange market. It is mechanism through which one country’s currency can be exchange i.e. bought or sold for the currency of another country. The foreign exchange market does not have any geographic location. Foreign exchange market is describe as an OTC (over the counter) market as there is no physical place where the participant meet to

Scribd Upload a Document
þÿ

Search Books, Presentations, Business, Academics...

Explore

Documents
• • • • • • • • • • • • •

Books - Fiction Books - Non-fiction Health & Medicine Brochures/Catalogs Government Docs How-To Guides/Manuals Magazines/Newspapers Recipes/Menus School Work + all categories Featured Recent

People
• • • • • • • • • • • • • • • •

Authors Students Researchers Publishers Government & Nonprofits Businesses Musicians Artists & Designers Teachers + all categories Most Followed Popular Sign Up | Log In

þÿ

/ 37

þÿ

Download A GRAND PROJECT REPORT ON

“FOREIGN EXCHANGE And RISK MANAGEMENT”

(In partial fulfillment of award of MBA degree)

Objective of the study

MAIN OBJECTIVE

This project attempt to study the intricacies of the foreign exchange market. The main purpose of this study is to get a better idea and the comprehensive details of foreign exchange risk management. SUB OBJECTIVES  To know about the various concept and technicalities in foreign exchange.  To know the various functions of forex market.  To get the knowledge about the hedging tools used in foreign exchange. LIMITATIONS OF THE STUDY
  

Time constraint. Resource constraint. Bias on the part of interviewers.

DATA COLLECTION  The primary data was collected through interviews of professionals and observations.  The secondary data was collected from books, newspapers, other publications and internet. DATA ANALYSIS The data analysis was done on the basis of the information available from various sources and brainstorming.

The foreign exchange market does not have any geographic location. So in this global village. exchange of currency is necessary. Foreign exchange market is describe as an OTC (over the counter) market as there is no physical place where the participant meet to . It is mechanism through which one country’s currency can be exchange i. so there is need for exchange of goods and services amongst the different countries. From the above example we can infer that in case goods are bought or sold outside the country. Need for Foreign Exchange Let us consider a case where Indian company exports cotton fabrics to USA and invoices the goods in US dollar. However the Indian exporter requires rupees means his home currency for procuring raw materials and for payment to the labor charges etc. For that also the foreign exchange is required. as the same is his home currency. Sometimes it also happens that the transactions between two countries will be settled in the currency of third country. the residents of two countries have to exchange currencies. bought or sold for the currency of another country. So we can imagine that if all countries have the same currency then there is no need for foreign exchange. In that case both the countries that are transacting will require converting their respective currencies in the currency of third country. If the Indian exporters invoice their goods in rupees. Thus he would need exchanging US dollar for rupee. So whenever a country buys or sells goods and services from or to another country.INTRODUCTION FOREIGN EXCHANGE MARKET OVERVIEW In today’s world no economy is self sufficient.e. The American importer will pay the amount in US dollar. Particularly for foreign exchange market there is no market place called the foreign exchange market. unlike in the primitive age the exchange of goods and services is no longer carried out on barter basis. Every sovereign country in the world has a currency that is legal tender in its territory and this currency does not act as money outside its boundaries. then importer in USA will get his dollar converted in rupee and pay the exporter. About foreign exchange market.

foreign exchange has been given a statutory definition. credits and balance payable in any foreign currency and any draft. Zurich and Frankfurt. Tokyo. traveler’s cheques.execute the deals. the currency sued to dominate international transaction. In order to provide facilities to members of the public and foreigners visiting India. In India. In most market US dollar is the vehicle currency. Expressed or drawn in India currency but payable in any foreign currency. at the option of drawee or holder thereof or any other party thereto. RBI has granted to various firms and individuals. Therefore it is stated that foreign exchange market is functioning throughout 24 hours a day.. license to undertake money-changing business at seas/airport and tourism place of tourist interest in India.1973 states: Foreign exchange means foreign currency and includes :  All deposits. followed by the new york. The market are situated throughout the different time zone of the globe in such a way that one market is closing the other is beginning its operation. The only exceptions are Thomas cook. purchase and sale transaction with the public. UAE exchange which though. that have been authorized only to purchase foreign currency towards cost of goods supplied or services rendered by them or for conversion into rupees. Section 2 (b) of foreign exchange regulation ACT. as we see in the case of stock exchange. Following are the major bifurcations:  Full fledge moneychangers – they are the firms and individuals who have been authorized to take both. western union. for exchange of foreign currency into Indian currency and vice-versa.  Restricted moneychanger – they are shops. letter of credit and bills of exchange. Authorized dealers – they are one who can undertake all types of foreign exchange transaction. viz. Besides certain authorized dealers in foreign exchange (banks) have also been permitted to open exchange bureaus. emporia and hotels etc. Bank are only the authorized dealers.  Any instrument payable.  . and not a bank is an AD. The largest foreign exchange market is in London. either in Indian currency or in foreign currency or partly in one and partly in the other.

Even among the banks RBI has categorized them as followes:  Branch A – They are the branches that have nostro and vostro account. 3. They have wide network of branches. bank balance and deposits in foreign currencies. Generally this is achieved by the intervention of the bank. as they have to pay in dollars for the goods/services they have imported. EXCHANGE BROKERS forex brokers play very important role in the foreign exchange market. In India as per FEDAI guideline the Ads are free to deal directly among themselves without going through brokers. CENTRAL BANK In all countries Central bank have been charged with the responsibility of maintaining the external value of the domestic currency. Participants in foreign exchange market The main players in foreign exchange market are as follows: 1. However the extent to which services of foreign brokers are utilized depends on the tradition and practice prevailing at a particular forex market center. The brokers are not among to allowed to deal in their own account allover the world and also in India. CUSTOMERS The customers who are engaged in foreign trade participate in foreign exchange market by availing of the services of banks. The balance amount is sold or bought from the market.  Branch B – The branch that can deal in all other transaction but do not maintain nostro and vostro a/c’s fall under this category.COMMERCIAL BANK They are most active players in the forex market. bills of exchange. As every time the foreign exchange bought or oversold position. cheques. . For Indian we can conclude that foreign exchange refers to foreign money. 2. Typically banks buy foreign exchange from exporters and sells foreign exchange to the importers of goods. 4. Exporters require converting the dollars in to rupee and imporeters require converting rupee in to the dollars. Commercial bank dealing with international transaction offer services for conversion of one currency in to another. which includes notes.

 Individual like share dealing also undertake the activity of buying and selling of foreign exchange for booking short term profits. if they feel that rate of particular currency is likely to go up in short term. followed by Bahrain. They buy that currency and sell it as soon as they are able to make quick profit.5 trillion a day. The world has come a long way from the days of barter .5.  Bank dealing are the major pseculators in the forex market with a view to make profit on account of favorable movement in exchange rate. As we know that the forex market is 24-hour market. The international trade however constitutes hardly 5 to 7 % of this total turnover. This also result in speculations. 6. Exchange rate System Countries of the world have been exchanging goods and services amongst themselves. paris.  Corporation’s particularly multinational corporation and transnational corporation having business operation beyond their national frontiers and on account of their cash flows being large and in multi currencies get in to foreign exchange exposures. With a view to make advantage of exchange rate movement in their favor they either delay covering exposures or do not cover until cash flow materialize. This has been going on from time immemorial. and back to Tokyo. They also buy foreign currency stocks. take position i. SPECULATORS The speculators are the major players in the forex market. The rest of trading in world forex market is constituted of financial transaction and speculation. Frankfurt. London. bonds and other assets without covering the foreign exchange exposure risk. the day begins with Tokyo and thereafter Singapore opens. OVERSEAS FOREX MARKET Today the daily global turnover is estimated to be more than US $ 1. Sydney. new york.e. thereafter India.

 Import and export of gold was freely allowed.  The total money supply in the country was determined by the quantum of gold available for monetary purpose. generally the central bank of the country. there was only one major change in the parity of the rupee. THE GOLD STANDARD Many countries have adopted gold standard as their monetary system during the last two decades of the 19th century. and putting it to different uses was freely allowed.  Melting gold including gold coins. the money in circulation was either partly of entirely paper and gold served as reserve asset for the . During the existence of the fixed exchange rate system.trade. Gold coins were an accepted mode of payment and medium of exchange in domestic market also. With the invention of money the figures and problems of barter trade have disappeared. Different countries have adopted different exchange rate system at different time. The inter bank rate therefore ruled the RBI band. the RBI ensured maintenance of the exchange rate by selling and buying pound against rupees at fixed rates. The barter trade has given way ton exchanged of goods and services for currencies instead of goods and services. The rupee was historically linked with pound sterling. 1) Gold Bullion Standard  Under this system. There were two main types of gold standard: 1) gold specie standard Gold was recognized as means of international settlement for receipts and payments amongst countries. This system was in vogue till the outbreak of world war 1. India was a founder member of the IMF. under this system the parties of currencies were fixed in term of gold. guaranteed to buy and sell gold in unrestricted amounts at the fixed price. The following are some of the exchange rate system followed by various countries. During the fixed exchange rate era. A country was stated to be on gold standard if the following condition were satisfied: Monetary authority.devaluation in June 1966. the intervention currency of the Reserve Bank of India (RBI) was the British pound.

with its fixed parities. paper money could be exchanged for gold at any time. many countries devalued their currencies.money supply. the relative prices of currencies are decided entirely by the market forces of demand and supply. Under this system there were uncontrollable capital flows. was in response to financial chaos that had reigned before and during the war. The gold bullion standard prevailed from about 1870 until 1914. was effectively buried. which set up an adjustable parity exchange-rate system under which exchange rates were fixed (Pegged) within narrow intervention limits (pegs) by the United States and foreign central banks buying and selling foreign currencies. However. FLOATING RATE SYSTEM In a truly floating exchange rate regime. the world economy has been living through an era of floating exchange rates since the early 1970. fostered by a new spirit of international cooperation. which lead to major countries suspending their obligation to intervene in the market and the Bretton Wood System. Where government interferes’ directly or through various monetary and fiscal measures in . the agreement extablished the International Monetary Fund (IMF) to act as the “custodian” of the system. the international trade suffered a deathblow. Thus. BRETTON WOODS SYSTEM During the world wars. In 1944. There is no attempt by the authorities to influence exchange rate. Consequently. In addition to setting up fixed exchange parities ( par values ) of currencies in relationship to gold. The exchange rate varied depending upon the gold content of currencies. economies of almost all the countries suffered. and intermittently thereafter until 1944. This was also known as “ Mint Parity Theory “ of exchange rates. World War I brought an end to the gold standard.. This agreement. In ordere to correct the balance of payments disequilibrium. following World War II. the United States and most of its allies ratified the Bretton Woods Agreement.

it can be inferred that since 2 USD or 150 INR can buy the same fountain pen. a Swedish economist. Therefore. introduced this system.determining the exchange rate. As per this theory if there were no trade controls. say USD = Rs. This would induce imports in India and also the goods produced in India being costlier would lose in international competition to goods produced in US. to put in simple terms states that currencies are valued for what they can buy and the currencies have no intrinsic value attached to it. FUNDAMENTALS IN EXCHANGE RATE Exchange rate is a rate at which one currency can be exchange in to another currency. it is known as managed of dirty float. Thus if 150 INR buy a fountain pen and the samen fountain pen can be bought for USD 2. This decrease in exports of India as compared to exports from US would lead to demand for the currency of US and excess supply of currency of India. This in turn. therefore USD 2 = INR 150. For example India has a higher rate of inflation as compaed to country US then goods produced in India would become costlier as compared to goods produced in US. The theory. cause currency of India to depreciate in comparison of currency of Us that is having relatively more exports. then the balance of payments equilibrium would always be maintained. METHODS FOR QOUTING EXCHANGE RATES EXCHANGE QUOTATION DIRECT INDIRECT VARIABLE UNIT VARIABLE UNIT . under this theory the exchange rate was to be determined and the sole criterion being the purchasing power of the countries. PURCHASING POWER PARITY (PPP) Professor Gustav Cassel.48. This rate is the rate of conversion of US dollar in to Indian rupee and vice versa.

712 Uploaded: 02/12/2009 . A Grand Project Report on Foreign Exchange and Risk Management DownloadPrintMobileCollectionsReport Document Report this document? Please tell us reason(s) for reporting this document dfb402f1db029e5 doc Spam or junk Porn adult content Hateful or offensive If you are the copyright owner of this document and want to report it. In direct quotation. please follow these directions to submit a copyright infringement notice.HOME CURRENCY FOREIGN CURRENCY METODS OF QOUTING RATE There are two methods of quoting exchange rates. the principle adopted by bank is to buy at a lower price and sell at higher price. Info and Rating Reads: 15. 1) Direct methods Foreign currency is kept constant and home currency is kept variable. Report Cancel This is a private document.

Category: Uncategorized. Never see ads on Scribd again. No Thanks Share & Embed Related Documents PreviousNext . Rated: 4.82051 5 false false 0 (39 Ratings) regarding future evolution business report factor companies dealing political stock credit forex synopsis (more tags) regarding future evolution business report factor companies dealing political stock credit forex synopsis synopsis india forex project india project (fewer) Follow jignay Sign Up for an Ad-Free Scribd • Remove all ads.

2 p. 102 p.295 p. 64 p. 4 p. 98 p. 73 p. 52 p. 64 p. 82 p. 295 p. 295 p. 1 p. 28 p. 295 p. 8 p. . 3 p. 55 p. 1 p. 47 p. 295 p. 1 p. 147 p.

62 p. 36 p. 1 p. 8 p. 1 p. 7 p. 45 p. 176 p. 93 p. 1 p. 137 p. 36 p. 2 p. 10 p.1 p. 155 p. 15 p. 27 p. 2 p. 10 p. 92 p. 14 p. . 19 p.

47 p. 92 p. 33 p. 92 p. 37 p. More from this user PreviousNext 53 p. 86 p. 75 p. 5 p. Recent Readcasters Add a Comment dfb402f1db029e5 . 25 p. 110 p. 53 p. 110 p.121 p. 105 p. 33 p.

com 06 / 27 / 2010 Reply Nirali_Shah_2235 left a comment this is a forex project 06 / 25 / 2010 Reply akhileshmalu left a comment similar 06 / 15 / 2010 . My mail id bhartigusain@gmail. its a good project please can u mail me the project my project is on same topic so kindly send me the project as the download facility is not working .Submit 4gen Amit_Abhichand_1066 left a comment redcast this 4 days ago Reply bhartigusain left a comment hello sir .

font-weight: normal. font-family: Helvetica.Arial. line-height: normal. font-style: normal.Reply Atul Tambe left a comment <a title="View A Grand Project Report on Foreign Exchange and Risk Management on Scribd" href="A Grand Project Report on Foreign Exchange and Risk Management" style="margin: 12px auto 6px auto.Sans-serif. and select print from the file menu (PDF reader required). font-size: 14px. font-size-adjust: none.scrib Signup I don't have a Facebook account dfb402f1db029e5 default email address (required) þÿ þÿ create username (required) .scrib http://w w w . Scribd Archive > Charge to your Mobile Phone Bill Sign up Use your Facebook login and see what your friends are reading and sharing. font06 / 13 / 2010 Reply Show More Ads by Google Print this document High Quality Open the downloaded document. Other login options Login with Facebook http://w w w . font-variant: normal.

We will send you an email with instructions on how to continue. and occasional account related communications. « Back to Login Reset your password Please enter your email address below to reset your password. We promise to respect your privacy. Why Sign up? Discover and connect with people of similar interests. dfb402f1db029e5 Email address: þÿ Submit .. Publish your documents quickly and easily.. Privacy policy You will receive email notifications regarding your account activity.password (required) Send me the Scribd Newsletter. Already have a Scribd account? dfb402f1db029e5 email address or username password Log In þÿ Trouble logging in? Login Successful Now bringing you back. You can manage these notifications in your account settings. Share your reading interests on Scribd and social sites.

com/scribd facebook.. Zurich and Frankfurt. Section 2 (b) of foreign exchange regulation ACT. credits and balance payable in any foreign currency and any draft.Upload a Document þÿ • • • • • • • • • • • • • • • • • About Press Blog Partners Branded Reader Web Stuff Scribd Store Support FAQ Developers / API Jobs Terms . scribd. traveler’s cheques. scribd. foreign exchange has been given a statutory definition. as we see in the case of stock exchange. letter of credit and bills of exchange. Therefore it is stated that foreign exchange market is functioning throughout 24 hours a day.  Any instrument payable. the currency sued to dominate international transaction. followed by the new york. scribd. scribd.1973 states: Foreign exchange means foreign currency and includes :  All deposits.com/scribd twitter. scribd. In most market US dollar is the vehicle currency. scribd. The largest foreign exchange market is in London. Expressed or drawn in India currency but payable in any foreign currency.com/scribd scribd.General Copyright Follow Us! scribd. viz. Tokyo. execute the deals. at the option of drawee or . In India. The market are situated throughout the different time zone of the globe in such a way that one market is closing the other is beginning its operation.

RBI has granted to various firms and individuals. for exchange of foreign currency into Indian currency and vice-versa.COMMERCIAL BANK . The only exceptions are Thomas cook. Following are the major bifurcations:  Full fledge moneychangers – they are the firms and individuals who have been authorized to take both. license to undertake money-changing business at seas/airport and tourism place of tourist interest in India. In order to provide facilities to members of the public and foreigners visiting India. Participants in foreign exchange market The main players in foreign exchange market are as follows: 1. purchase and sale transaction with the public.  Restricted moneychanger – they are shops. Bank are only the authorized dealers. western union.  For Indian we can conclude that foreign exchange refers to foreign money. bills of exchange. Even among the banks RBI has categorized them as followes:  Branch A – They are the branches that have nostro and vostro account.  Branch B – The branch that can deal in all other transaction but do not maintain nostro and vostro a/c’s fall under this category. 2. bank balance and deposits in foreign currencies. emporia and hotels etc. as they have to pay in dollars for the goods/services they have imported. cheques. Exporters require converting the dollars in to rupee and imporeters require converting rupee in to the dollars. Besides certain authorized dealers in foreign exchange (banks) have also been permitted to open exchange bureaus. either in Indian currency or in foreign currency or partly in one and partly in the other. CUSTOMERS The customers who are engaged in foreign trade participate in foreign exchange market by availing of the services of banks. UAE exchange which though. and not a bank is an AD. which includes notes. Authorized dealers – they are one who can undertake all types of foreign exchange transaction.holder thereof or any other party thereto. that have been authorized only to purchase foreign currency towards cost of goods supplied or services rendered by them or for conversion into rupees.

paris. The brokers are not among to allowed to deal in their own account allover the world and also in India. The balance amount is sold or bought from the market. As every time the foreign exchange bought or oversold position.  Bank dealing are the major pseculators in the forex market with a view to make profit on account of favorable movement in exchange rate. Typically banks buy foreign exchange from exporters and sells foreign exchange to the importers of goods. new york. 5. The rest of trading in world forex market is constituted of financial transaction and speculation. the day begins with Tokyo and thereafter Singapore opens. CENTRAL BANK In all countries Central bank have been charged with the responsibility of maintaining the external value of the domestic currency. As we know that the forex market is 24-hour market. take position i. 6. Generally this is achieved by the intervention of the bank. 3. London. if they feel that rate of particular currency is likely to go up in short term. followed by Bahrain. EXCHANGE BROKERS forex brokers play very important role in the foreign exchange market. Commercial bank dealing with international transaction offer services for conversion of one currency in to another.e. Sydney. In India as per FEDAI guideline the Ads are free to deal directly among themselves without going through brokers. thereafter India. OVERSEAS FOREX MARKET Today the daily global turnover is estimated to be more than US $ 1. Frankfurt. 4. The international trade however constitutes hardly 5 to 7 % of this total turnover. However the extent to which services of foreign brokers are utilized depends on the tradition and practice prevailing at a particular forex market center.5 trillion a day. They buy that currency and sell it as soon as they are able to make quick profit.They are most active players in the forex market.  Corporation’s particularly multinational corporation and . They have wide network of branches. and back to Tokyo. SPECULATORS The speculators are the major players in the forex market.

Exchange rate System Countries of the world have been exchanging goods and services amongst themselves.transnational corporation having business operation beyond their national frontiers and on account of their cash flows being large and in multi currencies get in to foreign exchange exposures. India was a founder member of the IMF. The rupee was historically linked with pound sterling. the RBI ensured maintenance of the exchange rate by selling and buying pound against rupees at fixed rates. bonds and other assets without covering the foreign exchange exposure risk. the intervention currency of the Reserve Bank of India (RBI) was the British pound.  Individual like share dealing also undertake the activity of buying and selling of foreign exchange for booking short term profits. The inter bank rate therefore ruled the RBI band. With the invention of money the figures and problems of barter trade have disappeared. With a view to make advantage of exchange rate movement in their favor they either delay covering exposures or do not cover until cash flow materialize. The following are some of the exchange rate system followed by various countries. The world has come a long way from the days of barter trade. The barter trade has given way ton exchanged of goods and services for currencies instead of goods and services. They also buy foreign currency stocks.devaluation in June 1966. THE GOLD STANDARD . During the fixed exchange rate era. This has been going on from time immemorial. Different countries have adopted different exchange rate system at different time. This also result in speculations. During the existence of the fixed exchange rate system. there was only one major change in the parity of the rupee.

However. the international trade suffered a deathblow. and putting it to different uses was freely allowed. following World War II. The exchange rate varied depending upon the gold content of currencies.. the money in circulation was either partly of entirely paper and gold served as reserve asset for the money supply. World War I brought an end to the gold standard. which set up an adjustable parity exchange-rate system under which exchange rates were fixed (Pegged) within narrow intervention limits (pegs) by the United States and foreign . In 1944. This system was in vogue till the outbreak of world war 1. under this system the parties of currencies were fixed in term of gold. Gold coins were an accepted mode of payment and medium of exchange in domestic market also.Many countries have adopted gold standard as their monetary system during the last two decades of the 19th century. A country was stated to be on gold standard if the following condition were satisfied: Monetary authority. BRETTON WOODS SYSTEM During the world wars. and intermittently thereafter until 1944.  The total money supply in the country was determined by the quantum of gold available for monetary purpose.  Import and export of gold was freely allowed. The gold bullion standard prevailed from about 1870 until 1914. This was also known as “ Mint Parity Theory “ of exchange rates. In ordere to correct the balance of payments disequilibrium. many countries devalued their currencies. the United States and most of its allies ratified the Bretton Woods Agreement.  Melting gold including gold coins. guaranteed to buy and sell gold in unrestricted amounts at the fixed price. generally the central bank of the country. economies of almost all the countries suffered. There were two main types of gold standard: 1) gold specie standard Gold was recognized as means of international settlement for receipts and payments amongst countries. 1) Gold Bullion Standard  Under this system. paper money could be exchanged for gold at any time. Consequently.

introduced this system. This would . Thus. was effectively buried. fostered by a new spirit of international cooperation. the world economy has been living through an era of floating exchange rates since the early 1970. Under this system there were uncontrollable capital flows. This agreement.central banks buying and selling foreign currencies. The theory. under this theory the exchange rate was to be determined and the sole criterion being the purchasing power of the countries. FLOATING RATE SYSTEM In a truly floating exchange rate regime. to put in simple terms states that currencies are valued for what they can buy and the currencies have no intrinsic value attached to it. There is no attempt by the authorities to influence exchange rate. As per this theory if there were no trade controls. For example India has a higher rate of inflation as compaed to country US then goods produced in India would become costlier as compared to goods produced in US. then the balance of payments equilibrium would always be maintained. which lead to major countries suspending their obligation to intervene in the market and the Bretton Wood System. it is known as managed of dirty float. was in response to financial chaos that had reigned before and during the war. the relative prices of currencies are decided entirely by the market forces of demand and supply. In addition to setting up fixed exchange parities ( par values ) of currencies in relationship to gold. PURCHASING POWER PARITY (PPP) Professor Gustav Cassel. the agreement extablished the International Monetary Fund (IMF) to act as the “custodian” of the system. Thus if 150 INR buy a fountain pen and the samen fountain pen can be bought for USD 2. it can be inferred that since 2 USD or 150 INR can buy the same fountain pen. with its fixed parities. Therefore. therefore USD 2 = INR 150. a Swedish economist. Where government interferes’ directly or through various monetary and fiscal measures in determining the exchange rate.

the principle adopted by bank is to buy at a lower price and sell at higher price. This rate is the rate of conversion of US dollar in to Indian rupee and vice versa. say USD = Rs. In direct quotation. METHODS FOR QOUTING EXCHANGE RATES EXCHANGE QUOTATION DIRECT INDIRECT VARIABLE UNIT VARIABLE UNIT HOME CURRENCY FOREIGN CURRENCY METODS OF QOUTING RATE There are two methods of quoting exchange rates. 1) Direct methods Foreign currency is kept constant and home currency is kept variable.48. This decrease in exports of India as compared to exports from US would lead to demand for the currency of US and excess supply of currency of India. A Grand Project Report on Foreign Exchange and Risk Management DownloadPrintMobileCollectionsReport Document Report this document? Please tell us reason(s) for reporting this document . This in turn.induce imports in India and also the goods produced in India being costlier would lose in international competition to goods produced in US. cause currency of India to depreciate in comparison of currency of Us that is having relatively more exports. FUNDAMENTALS IN EXCHANGE RATE Exchange rate is a rate at which one currency can be exchange in to another currency.

82051 5 false false 0 (39 Ratings) regarding future evolution business report factor companies dealing political stock credit forex synopsis (more tags) regarding future evolution business report factor companies dealing . Info and Rating Reads: 15. Report Cancel This is a private document. please follow these directions to submit a copyright infringement notice.dfb402f1db029e5 doc Spam or junk Porn adult content Hateful or offensive If you are the copyright owner of this document and want to report it. Rated: 4.712 Uploaded: 02/12/2009 Category: Uncategorized.

As a consequence of delisting. No Thanks Share & Embed Related Documents PreviousNext DELISTING OF SHARES FAQs – DELISTING 1. What is the difference between Voluntary delisting and Compulsory delisting? Compulsory delisting refers to permanent removal of securities of a listed company from a stock exchange as a penalizing measure at the behest of the stock exchange for not making submissions/comply with various requirements set out in the Listing agreement within the time frames prescribed. 2. Never see ads on Scribd again. What is meant by delisting of securities? The term "delisting" of securities means permanent removal of securities of a listed company from a stock exchange.political stock credit forex synopsis synopsis india forex project india project (fewer) Follow jignay Sign Up for an Ad-Free Scribd • Remove all ads. In voluntary delisting. the securities of that company would no longer be traded at that stock exchange. a listed company decides on .

In case of infrequently traded securities.its own to permanently remove its securities from a stock exchange. 2003 provide an exit mechanism. 3. in accordance to book building process. For this purpose. The offer price has a floor price. the offer price is as per Regulation 20 (5) of SEBI (Substantial Acquisition and Takeover) Regulations. which is average of 26 weeks average of traded price quoted on the stock exchange where the shares of the company are most frequently traded preceding 26 weeks from the date public announcement is made. Does a company listed at BSE/NSE have to provide exit offer to shareholders in case it delists from stock exchanges other than BSE and NSE? No. infrequently traded securities is determined in the manner as provided in Regulation 20 (5) of SEBI (Substantial Acquisition and Takeover) Regulations. What is the exit opportunity available for investors in case a company gets delisted? SEBI (Delisting of Securities) Guidelines. There is no ceiling on the maximum price. whereby the exit price for voluntary delisting of securities is determined by the promoter of the concerned company which desires to get delisted. the company does not have to provide exit offer to shareholders because it continues to be listed on the BSE / NSE which have nationwide reach and shareholders can exit any time they decide to so by way of selling shares in NSE/ BSE. . 4.

whether as a private or public company). A company. of the Act deals with the listing of the public companies. in case of a debenture issue. 21.e. The objectives of listing are mainly to: • provide liquidity to securities. shall be required to file an application. desirous of listing its securities on the Exchange. the company would no longer be traded at that stock exchange. Central or State Government. S. in the prescribed form. • Securities Contract (Regulation) Rules 1957. • mobilize savings for economic development. As a result of this. 19 of the Act deals with the requirements and documents to be submitted with respect to the listing of securities on a recognized stock exchange and i. where the securities are issued by way of a prospectus or before issue of 'Offer for Sale'. e) A statement showing(i) Dividends and cash bonuses. c) Copies of offers for sale and circulars or advertisements offering any securities for subscription or sale during the last five years. a) Memorandum and articles of association and. The securities may be of any public limited company. with the Exchange before issue of Prospectus by the company. Rules and guidelines for listing of securities: • Securities Contract (Regulation) Act.Listing & Delisting Of Securities Listing Listing means admission of securities to dealings on a recognized stock exchange. a copy of the trust deed. S. etc. or in the case of new companies. quasi governmental and other financial institutions/corporations. d) Copies of balance sheets and audited accounts for the last five years. municipalities. paid during the last ten years (or such shorter period as the company has been in existence. 1956. Delisting of securities means permanent removal of securities of a listed company from the stock exchange where it was registered. b) Copies of all prospectuses or statements in lieu of prospectuses issued by the company at any time. where the securities are issued by way of an offer for sale. • protect interest of investors by ensuring full disclosures. (ii) Dividends or interest in arrears. f) Certified copies of agreements or other documents relating to arrangements with or between:- . if any. for such shorter period for which accounts have been made up. if any.

As per S. l) A statement containing particulars of any commission. o Companies making public/rights issues are required to deposit 1 % of the issue amount with the designated stock exchange before the issue price. a company seeking listing of its securities on a stock exchange is required to submit a Letter of application to all the stock exchanges where it proposes to have its securities listed before filing the prospectus with the registrar of companies. (iii) Managing directors and technical directors. k) Particulars of shares and debentures issued (i) for consideration other than cash. changes in its capital structure (authorized. brokerage. o) A list of highest ten holders of each class or kind of securities of the company as on the date of application along with particulars as to the number of shares or debentures held by and the address of each such holder. j) A brief history of the company since its incorporation giving details of its activities including any reorganization. g) Certified copies of agreements with(i) Managing agents and secretaries and treasurers. 1956. report. manager or secretary. o Issuer company to complete the formalities for trading at all the stock exchanges where the securities are to be listed within 7 working days of finalization of the basis of allotment. and parties to all material contracts. (ii) Underwriters and sub-underwriters.(i) Vendors and/or promoters. subject-matter and general nature of the documents. balance sheet. part of which is reproduced or referred to in any prospectus. m) Certified copies of(i) letters of consent of the Controller of Capital Issues n) Particulars of shares forfeited. or (iii) in pursuance of an option. sales manager. (iii) Brokers and sub-brokers. agreements (including agreements for technical advice and collaboration). offer for sale. p) Particulars of shares or debentures for which permission to deal is applied for: • Companies Act. (ii) Selling agents. if any. 73 of the companies Act. whether in whole or part. (iv) General manager. discount or other special terms including an option for the issue of any kind of the securities granted to any person. issued and subscribed) and debenture borrowings. . valuation contract. reconstruction or amalgamation. concessions and similar other documents (except those entered into in the ordinary course of business carried on or intended to be carried on by the company) together with a brief description of the terms. h) Certified copy of every letter. o A company is required to complete the allotment of securities offered to the public within 30 days of the date of closure of the subscription list and approach the designated stock exchange for approval of the basis of allotment. during the last five years. • SEBI Guidelines. circular or advertisement offering securities for subscription or sale. 1956. court order or other document. (ii) at a premium or discount. i) A statement containing particulars of the dates of.

sub-division and consolidation of securities: to give proper notice of closure of transfer books and record dates. Compulsory delisting. Delisting As stated above delisting of securities means removal of the securities of a listed company from the stock exchange.• Stock Exchange guidelines. or that it voluntary wants to get delisted or in case of merger or acquisition of a company with/by some other company. to provide facilities for prompt transfer. In case the exchange does not give permission to the company for listing of securities. 2. broadly it can be classified under two head: 1. the company cannot proceed with the allotment of shares. . a listed company decides on its own to permanently remove its securities from a stock exchange. The companies are also required to pay to the exchange some listing fee as prescribed by the exchange every financial year. Voluntary delisting. 22 of SCRA. balance sheets and profit & loss accounts. A company delisted by a stock exchange and seeking relisting at the same exchange is required to make a fresh public offer and comply with the extant guidelines of the exchange. Compulsory delisting refers to permanent removal of securities of a listed company from a stock exchange as a penalizing measure at the behest of the stock exchange for not making submissions/comply with various requirements set out in the Listing agreement within the time frames prescribed. Under this agreement the company undertakes amongst other things. to forward 6 copies of unabridged Annual reports. including suspension/ delisting of their securities. registration. So. 1956. For example they may provide for the minimum issue size and market capitalization of the company A company has to enter into a listing agreement before being given permission to be listed on the exchange. This happens mainly due to merger or amalgamation of one company with the other or due to the non-performance of the shares on the particular exchange in the market. It may happen either when the company does not comply with the guidelines of the stock exchange. In addition to all these rules. to file shareholding patters and financial results on quarterly basis and to intimate promptly to the exchange the happenings which are likely to materially affect the financial performance of the company and its stock price and to comply with the conditions of Corporate governance. or that the company has not witnessed trading for years. However the company may file an appeal before SEBI under S. A company not complying with these requirements are may face some disciplinary action. In voluntary delisting. regulation and compliance every stock exchange have a set of guidelines of its own for the companies to be listed on them.

for a minimum period of six months. subject to their option to remain security-holders with the company. An exit price mechanism called the book-building method is used by the delisted companies to derive to the price at which the share will be brought into and that which will be paid to the shareholders. • promoters' Directors' track record especially with regard to insider trading. manipulation of share prices. unfair market practices (e. Companies can get delisted from all stock exchanges following the substantial acquisition of shares. or liquidator appointed. or has not paid interest on debentures for the last 2-3 years. an acquirer is required to make an offer to buy securities at the same offer price. in the market causing unjust aberrations in the share prices. • failure to maintain the minimum trading level of shares on the exchange. the acquirer making the offer. etc Where the securities of the company are delisted by an exchange under this method. following the delisting guidelines. . by a special resolution at a General Meeting of the company. Under the existing SEBI takeover code. returning of share transfer documents under objection on frivolous grounds with a view to creating scarcity of floating stock.A stock exchange may compulsorily delist the shares of a listed company under certain circumstances like: • non-compliance with the Listing Agreement. auctions. or has become defunct.g. here the exit price is based on the average of the preceding 26week high and low prices. or there are no employees. the companies are required to obtain prior approval of the holders of the securities sought to be delisted. • The company has become sick and unable to meet current debt obligations or to adequately finance operations. In such cases. has the option to buy the outstanding shares from the remaining shareholders at the same offer price. The shareholders will be provided with an exit opportunity by the promoters or those who are in the control of the management. In such a case there is no provision for an exit route for the shareholders except that the stock exchanges would allow trading in the securities under the permitted category for a period of one year after delisting. an exit opportunity need not be given in cases where securities continue to be listed in a stock exchange having nation wide trading terminals. close-out. The regulation state that if the public shareholding slides to 10 per cent or less of the voting capital of the company. the promoter of the company shall be liable to compensate the security-holders of the company by paying them the fair value of the securities held by them and acquiring their securities. However. etc. However. (Depending upon the trading position of directors or the firms). Companies may upon request get voluntarily delisted from any stock exchange other than the regional stock exchange.

Conclusion There was a time not very long ago when there was no regulating agency like SEBI.The acquirer is required to allow a further period of 6 months for any of the remaining shareholders to tender securities at the same price. • One representative from the Central government (Department of Company Affairs) / regional director/ Registrar of Companies. this law regulated operations of stock exchanges and listing of public issues. The reason remains the non-performance of the shares on the stock exchange and in case of merger and acquisition of one company with the other. However. In 1956. The Controller of Capital Issues fixed the price of shares issued by any company. especially in a company whose shares are regarded as value investment. The stock exchange monitors the possibility of any price manipulation and keeps under special watch the securities for which announcement for delisting has been made. Normally. as a result. 1956. Due notice of delisting and intimation to the company as well as other Stock Exchanges where the company’s securities are listed to be given. Every company that issues shares to the public is required to have its shares listed on a recognised stock exchange. 5. issued guidelines for delisting of securities in 2003. which came into force with effect from February 1957. 3. the Government of India enacted a law called Securities Contracts (Regulations). the Controller used to permit a small premium that could be charged by a company while issuing shares to the public. • One representative of the investors. This resulted in growth in the number of listing of companies on the stock exchanges. Alternatively it also laid to demand from several India-based MNCs that they should be permitted to delist their shares. • Executive Director/ secretary of the Exchange. Under this the prescribed procedure is: 1. Trading was done then also but then it was a one way route. . with the changing economic scenario and with the opening up of the Indian economy. The decision on delisting should be taken by shareholders though a special resolution in case of voluntary delisting & though a panel to be constituted by the exchange comprising the following in case of compulsory delisting: • Two directors/ officers of the exchange (one director to be a public representative). To consider the prevailing position in respect of delisting.2003 is the regulating Act framing the guidelines and the procedure for delisting of securities. the country witnessed huge influx of foreign capital. 2. The SEBI (Delisting of Securities) Guidelines. Among other things. Notice of termination of the Listing Agreement to be given. 4. SEBI appointed a committee to study the whole issue and. annexing a copy of the special resolution passed by the shareholders in case of voluntary delisting. This mechanism however is not seen as beneficial in depressed Indian market conditions as the price arrived through this principle may not adequately compensate the shareholder for the permanent loss of investment opportunity. Making an application to the exchange in the form specified. Public announcement to be made in this regard with all due information.

Under the present norms the exist price is decided on the basis of price of company’s shares on 26 weeks highs and lows and in this market condition these companies are finding it profitable to buy back their shares at this price.However. The reason being. . in the present scenario. the exist route method applied in case of voluntary delisting. if the market is studied minutely many MNC seeks to get their shares delisted at the expense of those investor who themselves are worried seeing their hard earned money whooping in number game. In this scenario SEBI should look after any such possibility of playing fraud on the investors by these big companies.

2. exit opportunity shall be given to all the public share holders holding the equity shares sought to be delisted in accordance with Chapter IV. are outstanding.Preliminary .APPLICABILITY & ELIGIBILITY: The provisions of these regulations shall apply to delisting of equity shares of a company from all or any of the recognized stock exchanges where such shares are listed but these shall not apply to any delisting made pursuance to a scheme sanctioned by the Board for Industrial and Financial Reconstruction under the Sick Industrial Companies (Special Provisions) Act. Schedule III . or Unless a period of three years has elapsed since the listing of that class of equity shares on any recognized stock exchange. Compulsory delisting means delisting of equity shares of a company by a recognized stock exchange.Regulations 3 and 4.Regulations 22 to 24.Regulations 29 to 31. Schedule II . In exercise of the powers conferred by Section 31 read with Section 21 of the Securities Contracts (Regulation) act. section 30.Contents of the Public Document. Chapter III .Regulations 5 to 8.DELISTING OF SHARES PROVISIONAL INTRODUCTION: Many public limited companies listed their shares in the recognized stock exchanges. . 1985 or by the National Company Law Board under Sec. Delisting is not permissible in the following circumstances: 1.Book building process. There are also provisions for delisting of shares from any one or from all stock exchanges where such shares are listed. which are convertible into the same class of equity shares that are sought to be delisted. 4. 2009. Procedure for delisting where no exit opportunity is required: The following procedure is to be adopted in this regard: 1.Criteria for compulsory delisting.Miscellaneous . 2. Chapter VIII .Voluntary Delisting .Compulsory Delisting . Chapter II .Special provisions for small companies and delisting by operation of law. section 11(1) and section 11(2) of Securities and Exchange Board of India Act. Delisting is of two types . the equity shares would not remain listed on any recognized stock exchange having nationwide trading terminals. These regulations contain 8 chapters and three schedules dealing the following: Chapter I . Chapter V . Chapter VII .Powers of the Board . or If any instruments issued by the company. 2.Regulations 25 and 26. or Pursuant to a preferential allotment made by the company. 1956.Regulations 9 to 21. the equity shares would remain listed on any recognized stock exchange which has nationwide trading terminals. 1992 the board made the regulations to regulate delisting of equity shares called as 'The Securities and Exchange Board of India (Delisting of Equity Shares) Regulations. Chapter IV . no exit opportunity needs to be given to the public shareholders. DELISTING . Pursuant to a buy back of equity shares by the company.Exit Opportunity . 3. Chapter VI . 1. and If after the proposed delisting. VOLUNTARY DELISTING: A company may delist its equity shares from all the recognized stock exchanges where they are listed or from one or more recognized stock exchanges where they are listed and continue their listing on other recognized stock exchanges where they are list subject to the following conditions: If after the proposed delisting from any one or more recognized stock exchanges. or Provides an exit option to the existing public shareholders at a specified rate. Schedule I .one is voluntary delisting and the other is compulsory delisting.Delisting of Equity Shares . Voluntary delisting means delisting of equity shares of a company voluntarily on application of the company.Regulations 1 and 2.424D of the Companies Act (now by High Court since the said provision has not come into force) if such schemeLays down any specific procedure to complete the delisting.

whichever is later. make the final application to the concerned recognized stock exchange in the form specified by the recognized stock exchange. One representative of the investors. 4. The proposed delisting shall be approved by a resolution of the Board of Directors of the company in the meeting. Make an application to the concerned recognized stock exchange for the principle approval of the proposed delisting in the form specified by the recognized stock exchange. of the proposed delisting 3. While considering the above said application. One representative of the Ministry of Corporate Affairs or Registrar of Companies. but may require the company to satisfy it as toCompliance of obtaining prior approval of the shareholders of the company. 2. and The Executive Director or Secretary of the recognized stock exchange Before making an order the recognized stock exchange shall give a notice in one English national daily with the circulation and one regional language newspaper of the region where the concerned recognized stock exchange is located. one Hindi national daily with wide circulation and one regional language newspaper of the region where the concerned recognized stock exchanges are located. Any other relevant matter as the recognized stock exchange may deem fit to verify. a) b) c) d) e) f) a) b) c) d) . delist any equity shares of a company on any ground prescribed in the rules made under Section 21A of the Securities Contracts (Regulation) Act. by order. Obtain the prior approval of shareholders of the company by special resolution passed through postal ballot. The special resolution shall be acted upon if and only if the votes cast by public shareholders in favor of the proposal amount to at least two times the number of votes cast by public shareholders against it. Any litigation or action pending against the company pertaining to its activities in the securities market or any other matter having a material bearing on the interests of its equity share holders. The fact of delisting shall be disclosed in the first annual report of the company prepared after the delisting. This application shall be disposed of by the recognized stock exchange within a period not exceeding thirty working days from the date of receipt of such application complete in all respects. the reasons for such delisting and the fact of continuation of listing of equity shares on recognized stock exchange having nationwide trading terminals. The notice shall mention the names of the recognized stock exchanges from which the equity shares of the company are intended to be delisted. 1. The company shall make an application to the concerned recognized stock exchange for delisting its equity shares. The following procedure is to be followed in this regard: Obtain the prior approval of the Board of directors of the company it its meeting. COMPULSORY DELISTING: A recognized stock exchange may. 5. after disclosure of all material facts in the explanatory statement sent to the shareholders in relation to such resolution. the recognized stock exchange shall not unfairly withhold such application. If special resolution is passed before the commencement of these regulations final application shall be made within a period of one year from the date of passing of special resolution or six months from the commencement of these regulations. Such application shall be accompanied by an audit report as required under Regulation 55A of the Securities and Exchange Board of India (Depositories and Participants) Regulations. covering a period of six months prior to the date of the application. 1996 in respect of the equity shares sought to be delisted. 2. and Within one year of passing the special resolution. The company shall give a notice of the proposed delisting in at least one English national daily with wide circulation. The compliance with any condition of the listing agreement with that recognized stock exchange having a material bearing on the interests of its equity shareholders. 4. Payment of listing fees to that recognized stock exchange. An application seeking in principal approval for delisting shall be disposed of by the recognized stock exchange within a period not exceeding thirty working days from the date of receipt of such application complete in all respects. The final application shall be accompanied with such proof of having given the exit opportunity as the recognized stock exchange may require.1. The above said decision shall be taken by a panel constituted by the recognized stock exchange consisting ofTwo directors of the recognized stock exchange (one of whom shall be a public representative). No order shall be made unless the company concerned has been given a reasonable opportunity of being heard. 1956. 6. The resolution of investor grievances by the company. Procedure for delisting where exit opportunity is required: 3.

1985. The recognized stock exchange shall in appropriate cases file prosecutions under relevant provisions of the Securities Contracts (Regulation) Act. Which have been compulsory delisted for a period ten years from delisting. Valuation of equity shares: The recognized stock exchange shall determine the fair value of the delisted equity shares. Consequences of compulsory delisting: Where a company has been compulsorily delisted the company. The recognized stock exchange shall consider the nature and extent of the alleged non compliance of the company and the number and percentage of shareholders who may be affected by such non compliance. The recognized stock exchange shall in appropriate cases file a petition for winding up the company under Sec. . 1956 or make a request to the Registrar of Companies to strike off the name of the company from the register under Sec. It shall form a panel of expert valuers from whom the valuer or valuers shall be appointed. The valuer may be a Chartered Accountant or a merchant banker. if any. The recognized stock exchange shall take reasonable efforts to verify the status of compliance of the company with the office of the concerned Registrar of Companies.a) b) c) d) giving a time period of not less than fifteen working days from the notice within which representations may be to the recognized stock exchange by any person who may be aggrieved by the proposed delisting and shall also display such notice on its trading systems and website. Inform all other stock exchanges where the equity shares of the company are listed about such delisting and the surrounding circumstances. the fair value of the delisted equity shares determined and the names and addresses of the promoters of the company. While considering an application for listing of any equity shares which had been delisted the recognized stock exchange shall have due regard to facts and circumstances under which the delisting was made' An application for listing made in respect of delisted equity shares shall be deemed to be an application for fresh listing of such equity shares and shall be subject to the provisions of law relating to listing of equity shares of unlisted companies. The names of the companies whose equity shares are proposed to be delisted and their promoters shall be displayed in a separate section on the website of the recognized stock exchange for a brief period of time. 1956 or any other law for the time being in force against identifiable promoters and directors of the company for the alleged non compliances. The promoter of the company shall acquire delisted equity shares from the public share holders by paying them the value determined by the valuer subject their option of retaining their shares. the names shall be shifted to another separate section on the website. Where the recognized stock exchange passes an order it shallForthwith publish a notice in one English national daily with wide circulation and one regional language newspaper of the region where the concerned recognized stock exchange is located. If delisted. the promoters and the companies which are promoted by any of them shall not directly or indirectly access the securities market or seek listing for any equity shares for a period of ten years from the date of such listing. made by the company as also any representations received in response to the notice and shall comply with the criteria specified in Schedule III as follows: The recognized stock exchange shall take all reasonable steps to trace the promoters of a company whose equity shares are proposed to be delisted with a view to ensuring compliance. 433 of the Companies Act. its whole time directors. SPECIAL PROVISIONS FOR SMALL COMPANIES: Where a company has paid up capital up to one crore rupees and its equity shares were not traded in any recognized stock exchange in the year immediately preceding the date of decision. The recognized stock exchange shall while passing any order consider the representations. of the fact of such delisting. such equity shares may be delisted from all the recognized stock exchanges. The provisions of Exit opportunity are not applicable in case of compulsory delisting. disclosing therein the name and address of the company. LISTING OF DELISTED SHARES: e) f) a) b) a) b) c) d) e) No application for listing shall be made in respect of any equity sharesWhich have been voluntarily delisted for a period of five years from delisting. 560 of the said Act. An application for listing of delisted equity shares may be made where a recommendation in this regard has been made by the Board for Industrial and Financial Reconstruction under the Sick Industrial Companies (Special Provisions) act.

by order. 1992 ('Act' for short) requires the intermediaries such as merchant banker. No intermediary associated with the securities market as the Board may bed notification in this behalf specify. banker to an issue. if he has made an application for such registration within the period of said three months. its equity shares may be delisted from all the recognized stock exchanges where they are listed. sell or deal in securities except under. 12 of the Act deals with the regulation of stock brokers. The promoter completes the process of inviting the positive consent and finalization of the proposal for delisting of equity shares within seventy five working days of the first communications made. to register with Securities Exchange Board of India ('SEBI' for short) in accordance with the regulations stipulated to such intermediaries. The promoter makes payment of consideration in cash within fifteen working days from the date of expiry of seventy five working days The concerned recognized stock exchange may delist such equity shares upon satisfying itself of compliance with this regulation. sub broker. At least ninety per cent of such public shareholders give their positive consent in writing to the proposal and have consented either to sell their equity shares at the price offered by the promoter or to remain holders of the equity shares even if they are delisted. sub broker and such other intermediary who may be associated with securities markets shall buy. share transfer agents etc.. sub brokers. the conditions of a certificate of registration obtained from the Board in accordance with the regulations made under this Act.. suspend or cancel a certificate of registration in such manner as may be determined by regulations. Sec. registrar to an issue. portfolio manager. after giving the person concerned a reasonable opportunity of being heard. Sec. sub broker and such other intermediary may be associated with securities market immediately before the establishment of the Board for which no registration certificate was necessary prior to such establishment. Such delisting is subject to the following conditions: a) b) c) d) e) f) The promoter appoints a merchant banker and decides an exit price in consultation with him. and in accordance with. indicating the exit price together with the justification therefor and seeking their consent for the proposal for delisting. The exist price shall not be less than price arrived at in consultation with the merchant banker. till the disposal of such application..12 of the Act provides that no stock broker. may continue to do so for a period of three months from such establishment or. shall buy or sell or deal in securities except under and in accordance with the conditions of a certificate of registration obtained from the Board. Securities Exchange Board of India Act.15B of the Act deals with the penalty for failure by any person to enter into agreement with the clients. stock broker. Sec. Sec. who is required under this Act or any rules or regulations made there under- . Sec. The promoter writes individually to all the public shareholders in the company informing them of his intention to get the equity shares delisted. return etc. 15A of the Act deals with the penalty for failure for furnishing information. A person buying or selling securities or otherwise dealing with the securities market as a stock broker. The Board may. underwriter. share transfer agent. 15A of the Act provides that if any person. investment adviser etc. trustee of trust deed.Where a company has three hundred or few public shareholders and where the paid up value of the shares held by such public shareholders in such company is not more than one crore rupees.

return or report to the Board. he shall be liable to a penalty of one lakh rupees for each day during which such failure continues or one crore rupees. whichever is less. The only question is whether the tribunal has power to modify the penalty passed SEBI. 2003. 2001-023 and from April 2002 to May 2002 and created the value of Rs. whichever is less.' . Sec.2 003 is applicable which provides that any contravention of any provision of the Act. he shall be liable to a penalty of one lakh rupees for each day during which such failure continues or one crore rupees. The respondent filed an appeal before SAT.. 2002. In terms of regulation 25 which was applicable prior to the amendment with effect from 2nd November. To file any return or furnish any information. SAT held that the proved charges against the respondent were not serious enough to warrant suspension of certificate of registration. SEBI suspended the certificate of registration. To maintain books of account or records. in breach of Sec. 2002. Rules and Regulations is to be dealt with in the manner provided in regulations 26 to 32 of the regulations prior to the amendment with effect from 27th September.29 crore. who is registered as an intermediary and is required under this Act or any rules or regulations made there under to enter into an agreement with his client. The respondent has acted as a sub broker at the National Stock Exchange with two NSE members. In the case 'Securities and Exchange Board of India V. Such person may continue to buy.To furnish any document. fails to file return or furnish the same within the time specified therefore in the regulations. it was provided that any contravention of any provisions of the Act. 1962 which provides that no stock broker or sub broker shall buy. Saikala Associates Ltd. fails to maintain the same.403. sell or deal in securities if he has made an application for such registration till the disposal of such application. he shall be liable to a penalty of one lakh rupees for each day during which such failure continues or one crore rupees.(2009) 90 CLA 330 (SC) the SEBI filed an appeal before Supreme Court against the order passed by the Securities Appellate Tribunal ('SAT' for short). deal in securities unless he holds a certificate granted by the Board under the regulations. whichever is less. fails to furnish the same. The appellant contended the following: The tribunal has no jurisdiction to modify the sentence. sell. fails to enter into such agreement.15B of the Act provides that if any person. books or other documents within the time specified therefore in the regulations. 12(1) of the Act read with rule of the SEBI (Stock Brokers & Sub Brokers) Rules. . without being registered as a sub broker with SEBI for the period from the years 2000-01. he shall be liable to a penalty of one lakh rupee for each day during which such failure continues or one crore rupees. Rules and Regulations is to be dealt with under the Securities and Exchange Board of India (Procedure for holding enquiry by enquiry officer and imposing penalty) Regulations. whichever is less. Therefore Regulation 25 prior to amendment with effect from 20th November.

to suspend or cancel a certificate of registration in such manner as may be determined by regulations. Rule 3 prohibits any broker or sub broker from buying. 2002 and thereafter the regulation 25 of the Regulations prior to amendment with effect from 20th November. SEBI can impose a minor penalty of suspension of the certificate of registration of the concerned stock broker or sub broker up to three months and can impose major penalty under Regulation 13(1)(b)(i) of cancellation of the certificate of registration and suspension of the . 15T of the Act read with regulation 21 of the Securities Appellate Tribunal (Procedure) Rules. This means that the existing brokers and sub brokers. 12(3) of the Act confer power on the Board. 2003 provides that any contravention of any provision of the Act. 15K of the Act in exercise of powers under Sec. The tribunal has been constituted under Sec. i. powers and authority conferred on it by or under the Act or any other law for the time being in force. Rule 3 of the Rules and regulation 25 of the Regulations. by an order. in business were allowed to continue pending registration but no new person commencing the business of the broker or sub broker after 20th August. The respondent submitted the following: A tribunal constituted under Sec. 12(1) of the Act read with Rule 3 of the Rules.The provisions of Sec. 2003) provide that any contravention of any provision of the Act. a creation of the said statute and as such the tribunal is to exercise the jurisdiction. 2000 the tribunal may make such orders or such directions as may be necessary as expedient to give effect to its orders or to prevent abuse of its process or to seek the ends of justice. It analyzed the Sections 12. unless he holds a certificate granted by the Board under the Regulations. Applicable regulations prior to amendment (with effect from 20th November. however.e. provided. The Supreme Court further held that regulation 25 is the crucial regulation. 15B of the Act. 15K of the Act and is. were allowed to continue with their business during the period till application for registration was disposed of. thus. 2000 can modify the order of SEBI so as to modify the nature of penalty not provided for under the provisions of the statutes in respect of the concerned violations. 1992 and Regulations. Under rule 21 of the SAT Rules. selling. 1992 could do the business pending registration and could commence only after being registered. Rules and Regulations is to be dealt with in the manner provided in regulations 26 to 32 of the Regulations prior to amendment with effect from 27th September.. those who were already in the said business on the date of coming into force of the Rules. 20th August. provided that no order under the section will be made unless the person concerned has been given a reasonable opportunity of being heard. Supreme Court after considering the arguments of both sides found that there is no dispute that there was violation of the provisions of Sec. 15A. As per provisions of regulations 13(1)(a)(iv) read with regulation 13(4) of the 2002 Regulations. Rules and Regulations is to be dealt with under the 2002 regulations. dealing in securities.

There is no power even on the Board to impose any monetary penalty. The Supreme Court allowed the appeal filed by SEBI.certificate of registration of the concerned stock broker or sub broker exceeding three months. From the above guidelines it is clear that in case of contravention of Sec. . the only penalty provided under the Act and the Regulation is of either suspension or cancellation of the certificate of registration as set out in Sec. 12(1) and/or Rule 3 of the Rules. which has to be read along with Rule 3 of the rules. the Supreme Court held that the position of broker/sub broker in case of violation is statutorily provided under Sec. No power is conferred on the tribunal to travel beyond the areas covered by sec. 12 and Rule 3. There is no scope for taking shelter under a discretionary power. When something is to be done statutorily in a particular way. 12(3) of the Act. 12 of the Act. In this case. it can only be done that way.

http://www.scribd.com/doc/12241467/A-Grand-Project-Report-on-Foreign-Exchangeand-Risk-Management .

Sign up to vote on this title
UsefulNot useful