NBoT Corrected the Demutualisation Process

Indore-based National Board of Trade (NBoT) in December 2010 corrected the demutualisation process undertaken in 2003.NBoT issued close to 66% of the bourses equity, amounting to around Rs 8 crore,to its original members as per the undertaking given to the regulator. The demutualisation process was corrected by issuing shares to the exchanges original 119 members. The composition of the NBoT would be changed following the completion of issue of shares so that the restructured shareholding pattern is reflected by the board. Post the correction of the demutualisation process, the regional commex can now be upgraded to a national one. The demutualisation process is one that involves conversion from a company limited by guarantee (of its members) to one limited by shares.

NBoT was set up in 1999 by Soyabean Processors Association of India (Sopa) with a purpose to offer forward trading in soya oil to edible oil industry stakeholders. The company was formed as one limited by guarantee without shares under Section 25 of the Companies Act,1956. NBoT decided to demutualise and issued shares to seven companies in 2003 at a time when commodity futures trading was restored after close to four decades. However, the process of demutualisation nontransparent and erroneous and the FMC directed the exchange to assign the value of the exchange and restore the ownership rights to 119 members existing on 31 July 2003. The exchange undertook to restructure the shareholding of the company with the help of a SEBI-registered merchant banker, Keynote Corporate Services on 19 February 2010.The proposal to restructure was then passed by a majority of the exchanges members and approved by FMC on 12 April 2010.