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5. OVER THE COUNTER EXCHANGE OF INDIA [OTCEI]:

5.01: Promoted by a consortium of leading Financial Institutions of India including Unit Trust of India (UTI), Industrial Credit & Investment Corporation of India (ICICI), Industrial Development Bank of India (IDBI), Industrial Financial Corporation of India (IFCI), Life Insurance Corporation of India (LIC) and others, OTCEI is a recognized Stock Exchange under the Securities Contracts (Regulation) Act, 1956. It is set up to provide small and medium sized companies access to the capital markets and to investors a convenient mode of investments. It is a ringless electronic national exchange listing an entirely new set of companies which companies will not be listed on other stock exchanges. The companies listed on any other exchanges cannot be listed on OTCEI. The OTCEI Exchange can list companies with issued capital from Rs.30 lakhs to Rs.25 crores.

5.02: THE ELIGIBILITY CRITERIA FOR LISTING ARE AS FOLLOWS:

(i) Companies with issued capital from Rs.30 lakhs to less than Rs.3 crores should make a minimum public offer of 40% of their capital or Rs. 20 Lakhs, in face value, whichever is higher.

(ii) Companies with issued capital from Rs. 3 crores to Rs. 25 crores should satisfy the listing requirements and guidelines as currently applicable on other exchanges.

(iii) Venture capital companies/funds approved by the Department of Economic affairs, Ministry of Finance or such other authority nominated by the Central Government, should make a minimum public offer of 20% of their issued capital in relaxation of Rule 19(2)(b) of the Securities Contracts (Regulation) Rules, 1957.

(iv) Companies engaged in hire purchase/finance/leasing/amusement parks etc. shall not be eligible for listing on the OTC Exchange.

(v) Companies covered under the MRTP/FERA may be listed on the OTC Exchange if they satisfy listing guidelines as on other recognized stock exchanges, such as minimum issued equity capital of Rs.300 lakhs or such other limit as may be prescribed.

(vi) A company which is listed on any other recognized stock exchange in India would not simultaneously be eligible for listing on the OTC Exchange.

(vii) The minimum number of centres for collection of application forms for issues of securities shall be four, one each from the Northern, Southern, Eastern and Western regions of the country, but may be increased by OTCEI depending on the size and the nature of the issue of securities made.

(viii) Whenever securities are issued at a price above par, the premium will be approved by the Controller of Capital Issues.

(ix) A company shall not issue securities at par in case the securities are eligible to be issued at a premium under the guidelines issued by the Controller of Capital Issues.

5.03: Members on the OTC Exchange are responsible for getting companies on the Exchange through the mechanism of sponsorship. Dealers may perform the dual roles of broker and market maker, and along with members, are responsible for the trading of securities on the Exchange. The Custodian/Settler is responsible for validation of trading documents, storage of trading documents and share certificates as also clearing of daily transactions and giving each member/dealer his net monetary position with respect to the market as a whole. Registrars and transfer agents are responsible for share transfers, allotment and keeping shareholders informed of all developments in the companies concerned. OTCEI is to undertake network expansion and market development, besides daily monitoring of market operation.

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