General Rules & Regulations of ISE

GENERAL REGULATIONS OF THE EXCHANGE

RESIGNATION

1. (a) A member may resign from the Exchange by giving one month's notice in writing to the Secretary of the Exchange of his intention so to resign. The Secretary on receipt of such notice shall forthwith post it on the Notice Board for a period not less than fifteen days for any objections that may be raised and received by the Secretary in writing. On the expiration of these fifteen days, the Secretary shall place the resignation with any objections received before the Board and the Board may accept the resignation at their entire discretion. The Board shall not be bound to give any reasons for their refusal to accept any resignation.

(b) On the acceptance of the resignation of a Member by the Board, such Member shall cease to be a member of the Exchange. His name shall be removed from the Register of Members of the Exchange and his card shall become the property of the Exchange.

EXPULSION & SUSPENSION OF MEMBERS

2. The Board may by a resolution expel any Member of the Exchange;

(a) False Declaration

Who has in the opinion of the said Board made a false declaration in his application for admission to the Membership.

(b) Criminal Offense

Who has been convicted of a criminal offense which in the opinion of the said Board renders him unfit to be a Member of the Exchange.

Provided that such resolution shall be passed by a majority of three-fourth of the Members present at a meeting of the Board at which not less than one-half of all the Members of the Board shall have been present.

3. (a) The Board may by resolution expel any member of the Exchange who becomes a Member of, or subscriber to, or becomes shareholders or debenture holder in any institution, association, company, or corporation, or is directly or indirectly interested in such an institution established and functioning within the territorial limits of Islamabad Stock Exchange where dealings in stocks, shares and like securities are carried on.

(b) Explanation

For the purpose of this rule five or more members of the Exchange or their employees making any bid or offer or entering into any contract or transaction in stocks, shares and like securities before or after business hours or during holidays or at any place other than the floor of the Exchange shall be deemed to be members of an association other than the Exchange.

4. FINE AND PENALTIES

The Board shall by a resolution suspend any Members of the Exchange, who within fourteen days after notice in writing has been served upon him by the Secretary of the Exchange fails to pay any subscription or fine or penalty imposed upon him by the said Board in accordance with any Rule for the time being in force and the said Board shall expel any such member who within a further period of thirty days fails to pay any such subscription or fine or penalty.

5. FRAUDULENT CONDUCT

The Board may by resolution:

(a) Expel or suspend a Member of the Exchange who is guilty of fraudulent conduct or who is proved to transacting his own constituent's business in fictitious names.

(b) The said Board may by a resolution expel, suspend and or fine a member of the Exchange who:

i) May refuse or fail to comply with any resolution or decision of the said Board;

ii) May contravene any rule of the Exchange or any decision of the said Board;

iii) May be guilty in the opinion of the said Board, of dishonourable or disgraceful conduct or willfully obstructs the business of the Exchange.

A resolution for expulsion under this rule shall not be valid or deemed to come into force unless it is passed by a majority of three-fourths of the Members present at a meeting of the said Board specially summoned for the purpose at which not less than one half of all the members of the said Board shall have been present and is confirmed at a subsequent meeting of the said Board specially summoned.

6. RECONSIDERATION OF RESOLUTION OF EXPULSION

The Board may on its own motion reconsider and may revoke or modify a Resolution. Such resolution shall not be deemed valid or come into force unless it is passed by a majority of three-fourths of the Members present at a meeting of the said Board specially summoned for the purpose at which not less than one half of all the members of the said Board shall have been present and is confirmed by a majority of the members of the said Board at subsequent meeting specially summoned.

7. NOTICE OF EXPULSION NO ACTION MAINTAINABLE

The Board may in their absolute discretion and in such manner as they think fit notify or cause to be notified to the Members of the Exchange or the public any resolution expelling or suspending a Member of the Exchange. No action or other proceedings shall under any circumstances be maintainable by the member expelled or suspended against the Exchange or the said Board or any member thereof any officer or servant of the Exchange for the publication or circulation of such notification.

8. CREDITORS OF EXPELLED OR SUSPENDED MEMBERS

The expulsion or suspension of a member shall not affect the right of his creditors.

9. SUSPENSION

(a) A suspended member will not during the terms of his suspension exercise or enjoy any of the rights or privileges of Membership.

(b) Reinstatement

An application of a suspended member for reinstatement shall be considered by a Board in accordance with the rules for the time being in force.

A Member shall not, without the special permission of the Board carry on business for or with a person who has been suspended or expelled from the Exchange.

10. EXPULSION ENTAILS FORFEITURE OF CARD, LIABILITIES TO SUBSIST

When a member of the Exchange is expelled, his Card or right of Membership and all his rights and privileges as member of the Exchange including any right to the use of or any claim upon or any interest in any property or funds of the Exchange shall be forfeited to and become the property of the Exchange, but any liability of any such Member to the Exchange or to any member of the Exchange shall continue and remain unaffected by his expulsion.

11. DISPOSAL OF FORFEITED CARD AND PROCEEDS THEREOF

A Card or right of membership which under any rule for the time being in force is forfeited to or vests in the Exchange, shall belong absolutely to the Exchange free of all rights, claims or interest of such member and the Board shall be entitled to deal with or dispose of the Card as the said Board may think fit. If the said Board sell such card, the sale proceeds thereof shall in the first place be applied to satisfying of the liabilities of the Member, whose card is sold, to other members in respect of any contract may subject to the rules of the Exchange and the balance thereof shall be paid into the funds of the Exchange provided always that the Exchange may in their absolute discretion by Resolution passed at a general meeting of the Members direct such a balance to be disposed of or applied in such other manner as they may think fit.

12. AUTHORIZED CLERKS NON-MEMBERS AS AUTHORIZED CLERK

(a) The Board shall from time to time fix the number of Authorized Clerks a member may be allowed to employ. The Authorized Clerks shall be allowed to be appointed upto 30th June year and thereafter fresh applications will have to be made by the Members for the continuation of such Authorized clerk.

(b) Members as Authorized Clerk:

Members of the Exchange may be employed as Authorized Clerks in excess of the number permitted by this rule. A Member so employed shall not himself be entitled to employ authorized clerks.

A member desirous of obtaining admission to the market for authorized clerks shall apply for the permission of the Board in such form as the said Board may from time to time prescribe.

(d) The employer shall pay to the Exchange an annual subscription of Rs.120/- or such higher fee as may be prescribed from time to time in respect of such authorized clerk employed by him. No such subscription shall be payable in respect of a member who acts as an authorized clerk.

(e) The approval of appointment of agents will be done by the office of the Exchange on having given due notice to the members of the Exchange.

Annual fees for the appointment of the accredited Agents shall be as under:

i) For first 6 Agents Rs. 120/- each

ii) For 7th to 10 Agents Rs. 240/- each.

13. (a) UNAUTHORIZED CLERKS EXCLUDED FROM MARKET

An authorized clerk is entitled to admission to the market and the clerk who is not authorized is not so entitled.

(b) An application by a member to employ an authorized clerk who previously had been acting as clerk to another member must be accompanied by a clearance certificate from the former employer.

(c) The Governing Board of Directors of the Exchange, may in its sole and absolute discretion, dispense with the condition of production of a No objection Certificate as required by Rule 13(b) and may permit any person to work as an Authorized Clerk of any member of the Exchange.

14. (a) POWER OF AUTHORIZED CLERK

An authorized clerk or a member acting as authorized clerk can transact business only on behalf of his employer. He shall not bargains in his own name or in any name other than that of his employer or sign contracts in his own name or in any other name save on behalf of his employer.

(b) The Board shall expel immediately an authorized clerk or a member acting as an authorized clerk who contravenes this rule.

A member shall be liable for all bargains made with other members on the market by any authorized clerk employed by him and he shall fulfill such bargains according to the Rules of the Exchange in the manner as if such bargains had been made personally by himself.

15. REGISTER OF AUTHORIZED CLERKS

The Secretary of the Exchange shall keep a register of authorized clerks and shall enter in such register the name of the clerk and the member who employs him the date of the beginning and termination of his employment or the withdrawal of his authorization.

16. NOTICE OF AUTHORIZATION - TERMINATION & WITHDRAWAL

A member employing an authorized clerk or terminating employment or withdrawing the authorization of such clerk shall give a notice in writing to the Secretary of the Exchange of the name of such clerk and of the date of the beginning or termination of his employment or the withdrawal of his authorization and the said Secretary shall forthwith post the notice of such employment, termination or withdrawal upon the Notice Board of the Exchange.

17. (a) LIABILITY OF THE EMPLOYER TO CONTINUE UNTIL NOTICE

The responsibility of a Member for the bargains of his authorized clerk shall continue until one day after the notice of the termination of his employment or the withdrawal of his authorization shall have been received by the said Secretary.

A member may, on given notice in writing to the Secretary of the Exchange and on payment of a fee prescribed by the Board, nominate a substitute clerk to act temporarily in the absence of an authorized clerk for a period not exceeding 30 days.

(b) APPOINTMENT OF ACCREDITED AGENTS

Members are hereby informed that it has been decided by the Governing Board of Directors of the Exchange that it is not desirable to extend the responsibility of a member for the bargaining of his authorized clerk until one day after the notice of termination of employment or the withdrawal of his authorization is received by the Secretary, and the responsibility of a member should continue until one day after the notice of termination of his employment.

1) In view of the fact that a member giving No objection Certificate remained liable for the transactions entered into by his Agent, while he was in his employment, the practice of issuing a notice calling for objections within seven days should be discontinued. Only in case of new Agents, the objections be invited and the usual procedure be followed.

2) In case, the Agent of one member left his services and joined the other member and if a clearance certificate was issued by his former employer, then the Secretary, if he was satisfied that the application was bonafide, and was made on the prescribed form, may allow such an agent to function on the Exchange from one day after the notice of termination of his employment, or withdrawal of his authorization was received by the Secretary.

3) The appointment made by the Secretary will be provisional and will be subject to consideration by the advisory and arbitration committee of the Exchange and further confirmation by the Board of Directors of the Exchange. If the Board approved the appointment, the Agent shall continue, if the Board does not approve the appointment, the Agent shall immediately cease to work.

4) The member marking the appointment, whether appointment was provisional or permanent, shall be responsible for the bargains of his Agent.

5) If and when any member send a notice to the Office of the Exchange canceling agentship, the agentship will be cancelled only after the notice has been on the notice Board for 48 hours and the Office of the Exchange has notified the member concerned.

The members wishing to appoint or renew Accredited Agents on the Exchange must furnish an Undertaking on non- judicial stamp paper of Rs.5/- signed by their Agents as follows:-

1) I shall maintain strict discipline at all times in the Trading Hall and the premises of the Exchange.

2) I shall do business on the Exchange in the name of and on behalf of his appointing member only. I shall not do any business on behalf of other member of the Exchange directly as their constituent or on account of his constituents;

3) I shall at all times abide by the Rules and Regulations of the Exchange and will not act or indulge in any activities which might prejudice the fair name or the interest of the Exchange or his appointing member or other members".

18. (a) ADMISSION DURING GOOD BEHAVIOR

Authorized Clerks shall be admitted to the market only during good behavior and the Board may, by a resolution, in their absolute discretion refuse admission to the market of the Authorized Clerk of any member and may at any time, suspend, terminate, the right of admission of such clerk without assigning any reason whatsoever.

(b) Clerks of defaulters or of Members who have been suspended or expelled shall be excluded from the market.

19. BADGES

A Member and his Authorized Clerk when in the market must wear badges. No clerk without such badge shall be admitted into the market to transact business.

That appropriate badges in three different designs shall be issued to the members, their agents as well as runners.

That while entering the Trading Hall the Members need to wear these badges, which will be more in the form of Identity Cards, which should be carried with them on their person. As far as the Agents and Runners were concerned, it should be insisted that they wear these badges while entering the Trading Hall as well as all times during which they are inside the Trading Hall.

20. (a) PENALTY FOR IMPROPER USE OF BADGE

The Board shall expel or suspend any authorized clerk who transfers his badge to any person.

(b) When a clerk is expelled or suspended for any reason his employer shall not be permitted to substitute a clerk in his place for a period not exceeding three months.

21. LOSS OF BADGE

A member shall notify the loss of badge to the Secretary of the Exchange who will issue another in its place on application by such member and on payment of Rs.6/- or such other sum as the Board may from time to time determine.

22. RETURN OF BADGE

A member who terminates or withdraws the authorization of clerk(s) shall return the badge to the Secretary of the Exchange on the date of such termination or withdrawal.

23. MEMBERS CEASING TO DO BUSINESS

A member who has ceased doing business in his own name shall not be entitled to employ any authorized clerk and shall return the badge of any such clerk which may have been issued to him.

24. EXPELLED MEMBERS

No Member shall, without the special permission of the Board, take into or continue in his employment in any capacity in any business carried on by him, a former Member who has been suspended or expelled.

24-A. That no member of the Exchange is allowed to give to the Press for publication any report on Stock and Shares, Members of the Exchange may issue reports on stocks and shares only to their clients, Joint Stock Companies and Banks, but are debarred from general circulation of the same.

25. REPORT OF VIOLATION OF RULES

Every member of the Exchange shall immediately report to the Board any violation by any Members of any rule of the Exchange which may come under his notice. Any report so made to the said Board or to the Secretary of the Exchange shall be deemed privileged and confidential.

26. SUB-COMMITTEES

The Board shall every year in January elect from among the Members of the Exchange the following Sub-committees:-

1: Arbitration Committee

2: Default Management Committee.

The Board from time to time may increase or reduce the number of Members of either Sub-committee and may amalgamate or merge any of the above Sub-committee with any other Committee or Sub-committee.

27. CHAIRMAN AND HONORARY SECRETARY

A Sub-committee shall immediately after its appointment elect from its own body its Chairman. It may also elect from its own body an Honorary Secretary.

28. REMOVAL OF MEMBER

(a) The Board may for reason to be recorded remove Member of a Sub-committee from such Sub-committee.

(b) RETIRING MEMBERS

All Retiring Members of Sub-committee shall be eligible for re-election.

All Retiring Members of a Sub-committee shall continue in office until their successors are validly elected.

(d) CASUAL VACANCY

A Casual Vacancy in a Sub-committee shall be filled by the appointment of a member so appointed shall retain office till the next election and shall be eligible for re-election..

(e) LEAVE AND TEMPORARY APPOINTMENT

A member of a Sub-committee who is likely to be absent from Islamabad for a period exceeding three months shall give intimation to the Secretary of the Sub-committee and such intimation shall be placed before the Sub-committee at its next meeting. The Sub-committee may there-upon either declare the seat of such member vacated, when such vacancy shall be filled by the Board in the manner provided in these rules or the Sub-committee may appoint a member of the Exchange to act on the Sub-committee in place of the absent member. The member so appointed shall vacate office on the return to Islamabad of the absent member. A member absenting himself from Islamabad for a period exceeding three months without giving intimation shall be deemed to have vacated his seat.

The Sub-committee may from time to time determine its own quorum, provided that such quorum shall not be less than one-third of the total number of the members of such Sub-committee.

29. ARBITRATION COMMITTEE

The Arbitration Committee shall consist of not more than 20 Members and not less than 10 Members.

30. DISPUTES TO BE REFERRED TO ARBITRATION

Whenever any difference arises between Member inter se, or between any of them on the one hand and their constituent on the other or between any of the Member on the one hand and their authorized clerks on the other hand and between authorized clerk on the one hand and their constituents on the other hand touching or in connection with the trade or transaction therein, it should be referred to Arbitration and shall be dealt with as provided hereinafter.

(a.) All claims, disputes etc. arising out of transactions made subject to the Rules of the Exchange which are not otherwise amicably settled shall be referred to the Advisory & Arbitration Committee.

(b.) The Advisory & Arbitration Committee of the Exchange to whom the dispute has been referred shall appoint two arbitrators be drawing from amongst the members of Advisory & Arbitration Committee of the Exchange, present in Islamabad.

(c.) Lots shall be drawn from amongst the names of the Members whose names have not been so drawn in the lots previously. If however the names of all the members have been drawn the lot once, then the names of all members be included for drawing subsequent loss.

(d.) The parties to the dispute may remain present at the time of drawing of lots.

(e.) The Member whose name has been drawn in the lot shall be bound to at as an Arbitrator so long as he continues to be Member of the advisory and Arbitration Committee of the Exchange.

(f.) In case, if one or both the Arbitrators refuse, neglect or fail to consider the dispute or give the Award, fresh Arbitrator shall be appointed by the Advisory & Arbitration Committee.

31. APPLICATION FOR ARBITRATION

(a) When a dispute which according to these rules must be referred to the Arbitration arises, any party to dispute may apply to the Advisory & Arbitration Committee to enquire into appoint arbitrator to arbitrate in the dispute. The applicant shall :-

(i) Pay fee of Rupees five to the Exchange.

(ii) Deposit the cost of the Stamp of the Award, if so directed by the Advisory & Arbitration Committee.

(iii) In case where he is not a member of the Exchange, shall give an Undertaking

to abide by all the Rules & Regulations of the Exchange in force for the Arbitration and shall furnish a guarantee or Security for the due performance of the Award as may be asked for by the said Committee.

(b) The Advisory & Arbitration Committee may reject or dismiss any application if:

(i) The applicant refuses, neglects or fails to comply with the provisions of any rules or regulations, or

(ii) The applicant refuses, neglects or fails to carry out any direction issued by the Committee or the Board, or

(iii) The application is not otherwise in order or in accordance with the Rules and Regulations of the Exchange, or

(iv) The subject in the dispute has arisen from a non-stock Exchange transaction or the transaction is otherwise illegal and not according to law.

32. APPOINTMENT OF ARBITRATORS

(a) Whenever such dispute is referred to the Arbitration Committee it shall be heard by two of its members acting as Arbitrators with reference to such dispute.

(b) Notice

The Secretary of the Committee shall give the parties to the dispute not less than two days notice of the time and the place appointed for Arbitration.

If both parties to the dispute are present at the appointed time and place, the Arbitration shall proceed to hear the reference and give the Award.

(d) "Ex-Parte" decision and summary disposal

If the party against whom complaints are made is not present at the appointed time and place, the Arbitrators may hear and decide the dispute ex-parte, and if the party making complaint is not present the Arbitrators may dismiss the reference summarily.

(e) Remedies at Law

The Committee may decline to hear the dispute or may dismiss any case and refer the parties to their remedies at law and may itself so refer them upon joint request of parties.

33. DISAGREEMENT BETWEEN ARBITRATORS

If the Arbitrators hearing a reference not agreed as to the Award to be made, they shall refer the dispute or such party thereof in respect of which they cannot agree to a third member of the Arbitration Committee, and the three members shall then together Arbitrate in the dispute and the Award of any two of them shall be deemed to be the Award in the Arbitration.

34. LATE CLAIMS BARRED

The Arbitration Committee shall not take cognisance of and claim or dispute which shall not be referred to them within three months from the date when it arose.

35. APPEAL TO ARBITRATION COMMITTEE

(a) A party to a dispute who is dissatisfied with any Award of the appointed Arbitrators may appeal to the Arbitration Committee against such Award within seven days of the receipt by him of such Award.

(b) Statements of Objection

The party so appealing shall state his objects to the Award in writing and shall deposit with the Secretary of the Exchange in cash the full amount ordered to be paid in the Award and fee of Rupees two and shall annex to his appeal a certificate of the said Secretary that such amount and fee have been deposited and the Arbitration Committee shall not entertain an appeal to which such certificate is not annexed.

When such certificate is annexed to the appeal, the Arbitration Committee shall itself, proceed to hear the appeal and Arbitrate in the dispute.

(d) Certain Members may not Vote

The Members of the Arbitration Committee who have made any Award against which an appeal is made to the said Committee at which the appeal is heard but shall not be entitled to vote.

36. AWARD OF COMMITTEE FINAL IN CERTAIN CASES

(a) The Award of the Arbitration Committee in a dispute shall be final and shall be deemed binding on the parties to the dispute and upon such of their constituents as have, in the form as the Board may from time to time prescribe, submitted to Arbitration of the Exchange if the sum involved in such dispute is less than one thousand rupees.

(b) Appeal to Board

If the sum involved in such dispute is Rs.1,000/- or above the party dissatisfied with the Award of the Arbitration Committee may appeal against such Award to the Board within seven days of the Award.

A party appealing to the said Board shall state in writing the objections to the Award of the Arbitration Committee and shall deposit with the Secretary of the Exchange in cash the full amount ordered to be paid in such Award and a fee of Rs.5/- and shall annex with his appeal the certificate of the said Secretary that such amount and fee have been deposited and the Board shall not entertain an appeal to which such certificate is not annexed.

(d) Decision of Board Final

When such certificate is annexed to the appeal, the said Board shall proceed to hear the appeal and the decision of the said Board shall be deemed final and binding on the parties to the appeal and on the constituents of such members, who have in the form as the said Board may from time to time prescribe, submitted to the Arbitration of the Exchange.

37. MEMBERS INTERESTED NOT TO ATTEND

A party to a dispute who is the member of the Arbitration Committee or the Governing Board shall not attend any meeting of the said Committee or the said Board which enquiry into the dispute is made or at which an appeal is heard.

38. ADJOURNED MEETINGS

(a) It shall be no objection to an Award of the Arbitration Committee or of the Board that the meeting at which a dispute was inquired into or an appeal was heard was adjourned from time to time or that the enquiry was not completed or that the appeal was not finally heard at one meeting.

(b) It shall be no objection to an Award of the Arbitration Committee or of the Board that the composition of the said Committee or Board changed during the enquiry or appeal. Provided, however, that no member of the Committee or the Board, as the case may be, who shall have not been present at every meeting at which enquiry not the dispute was made or appeal not heard shall participate in giving the final decision.

(c) Three members of the said Committee or the said Board shall be necessary to constitute a quorum for the purpose of the enquiry or appeal.

(d) In case the members of the said Committee or the said Board are equally divided, the President or the Chairman shall be entitled to have a casting vote.

39. SUMMARY DISMISSAL

(a) If any member who is a party to a dispute and who has appealed against any Award to the Arbitration Committee or the Board is not present at the time fixed for hearing the appeal the said Committee or the said Board as the case may be, may dismiss the appeal summarily.

(b) Appeal Ex-Parte

If any member who is a party to a dispute and in whose favour an Award has been made is not present at the time fixed for hearing the appeal against such Award the said committee or the said Board may proceed to hear the appeal ex-parte.

40. REHEARING EX-PARTE AWARD

The Arbitration Committee may, on sufficient cause being shown, and on payment of a fee of Rs.5/- set aside an Award made by the Arbitration or the said Committee ex-parte and direct the reference or the appeal to be again inquired into or heard.

41. EXTENSION OF TIME

The Board may for special reasons extend the time in which a reference for Arbitration or an appeal against any Award of the Arbitrators or the Arbitration Committee may be made whether the time for making the same has expired or not.

42. EXPULSION OF MEMBER

The Member who fails or refuses to submit to or abide by or carry out any Award of the Arbitrators or the Arbitration Committee or the Board as the case may be shall be expelled from the Exchange by a resolution of the said Board.

43. FEES

A party to a dispute against whom an Award is finally made shall pay all the fees payable to the Exchange in the course of the Arbitration.

44. THE DEFAULT MANAGEMENT COMMITTEE CONSTITUTION

The Default Management Committee shall consist of four Members.

(a) Declaration of Defaulters

A member unable to fulfill his engagements shall be publicly declared a Defaulter by direction of the President or any two Members of the Board and there-upon cease to be a Member.

(b) The Board may order a member who fails to meet an obligation to a Member or non-member arising out of a Stock Exchange transaction, to be declared a Defaulter.

(c) It shall also be the duty of any member immediately to advise the Secretary of any failure by a member or a firm of members to discharge its liabilities in full. An application for the declaration of default in such a case shall be submitted to the Secretary not later than the day following due date of payment.

45. PENALTY FOR DEFAULT

(a) A member who has been declared a defaulter shall at once cease to be a member of the Exchange.

(b) A member who has been adjudicated an insolvent shall be declared a defaulter and shall at once cease to be a Member of the Exchange although he may not be at the same time a defaulter on the Stock Exchange.

46. DEFAULTER’S ACCOUNTS

When a member has been declared a defaulter the Default Management Committee shall take charge of all his books of accounts, documents, papers and vouchers to ascertain the state of his affairs and the defaulter shall hand over such books, documents, papers and vouchers to the Committee.

47. LISTING OF DEBTORS AND CREDITORS

(a) The Defaulter shall file with the Default Management Committee within fifteen days of the declaration of his default a written statement containing a complete list of his debtors and creditors and the sums owing by and to each.

(b) Statement of Accounts:

The defaulter shall submit to the Default Management Committee such statements of accounts, information and particulars of his affairs as the said Committee from time to time require and shall attend all meetings of the said committee held in connection with his default.

48. ENQUIRY

The Default Management Committee shall enter into a strict enquiry into his accounts and into his dealings in the market and shall report to the Board anything improper, unbusinesslike, and unbecoming on the part of the member in connection therewith which may come to their knowledge.

49. DEFAULTER’S ASSETS

(a) The Default Management Committee shall recover all monies, shares, securities and other assets due, and deliverable to the defaulter by any other member in respect of any transactions or dealings made subject to these rules and such assets shall, if not contrary to the provisions of any law for the time being in force, vest in the Default Management Committee for and on account of the creditor members of the Exchange.

(b) Distribution

The Default Management Committee shall pay all such assets into such Bank and such names as the Board may from time to time direct or shall distribute the same as soon as possible pro-rata upto one hundred paisas in the rupee without interest among the creditor members of Exchange whose claims are admitted in accordance with these rules.

All monies, shares, securities and other assets due, payable or deliverable to the defaulters must be paid or delivered to the Default Management Committee within thirty days of the declaration of default. A member violating this rule shall be declared a defaulter.

50. HAMMER PRICES

In every case of default, the Board shall fix prices current in the market immediately after the declaration, at which prices all members having contracts open with the defaulter shall close their transactions by buying of or selling to him such securities as he may have contracted to take or deliver the difference arising from the defaulters transactions being paid.

51. CLAIMS AGAINST DEFAULTER

(a) Within a fortnight of the declaration of default every active member shall send to the Secretary of the Default Management Committee a statement of his accounts with the defaulter. The Default Management Committee shall not entertain any claim against the defaulter which is not made within one month of the declaration of the default.

(b) Delay in submission of accounts:

The Secretary of the Default Management Committee shall call upon any such member failing to send such statement or certificate within the time prescribed to send such statement or certificate within one week.

The said Secretary shall report to the Board the name of any such Member who fails to send such a statement or certificate within the time herein prescribed.

52. PENALTY FOR FAILURE TO SUBMIT ACCOUNT

(a) The Board may by a resolution fine, suspend or expel any member who fails to submit a statement of his accounts with the defaulter or certificate that he has no such account within the time prescribed in these rules.

(b) Misleading Statement

The said Board may by a resolution fine, suspend or expel a member when the said Board is satisfied that any such statement or a certificate sent by such member was false or misleading.

53. ACCOUNTS OF DEFAULT MANAGEMENT COMMITTEE

(a) The Default Management Committee shall keep a separate account in respect of all money shares, securities or other assets payable to a defaulter and which are received by them and shall defray therefrom all costs, charges and expenses incurred in or about the collection of such assets or in or about any proceedings taken by them in connection with the default.

(b) Report

The Default Management Committee shall every six months present a report to the Board relating to the affairs of a defaulter and shall show the assets realized, the liabilities discharged, and dividend given.

All accounts kept by the Default Management Committee in accordance with the rules shall be open to inspection by any creditor member.

(d) Scale of Charges

The Scale of Charges to be paid to the Exchange on the Assets collected shall be as follows:-

5 per cent on the first Rs.5,000/- collected or part thereof.

2 per cent on any sum in excess of Rs.5,000/-.

54. APPLICATION OF ASSETS

(a) The Default Management Committee shall apply the next assets remaining in their hands after defraying all such costs, charges and expenses referred to in the foregoing in satisfying ratably the claims of all members against such defaulter arising out of any contract between a member and such defaulter in the market made subject to the rules of the Exchange.

(b) Certain claims not be entertained

The Default Management Committee shall not entertain any claim against a defaulter which does not arise out of any contract between a member and such defaulter made subject to the rules of the Exchange nor shall it entertain any claim against a defaulter in respect of any contract, unless a comparison shall have been made by signing the entries as provided in the rules or a contract note shall have been rendered as provided in the rules and receipt for the same obtained either in the duplicate or counterpart of such contract note or in the peons' book stating the date and the number of the contract rendered. The Default Management Committee shall, however, entertain the claims of a member against the defaulter in respect of loss incurred by him by reason of the failure of the contracts introduced by such defaulter provided that the defaulter was duly registered as a remisier or authorized clerk to such creditor member.

Any claim arising from any arrangement for settlement of claims in lieu of bonafide money payment on the day when such claims become due cannot be proved against a defaulters' estate.

(d) Any member or firm guilty of accepting anything less than a full and bonafide money payment in settlement of a debit arising out of transaction in securities shall be suspended for a period of not less than one year.

(e) Loan

A loan with or about securities shall not be admitted as a claim against a defaulters' estate.

55. DIFFERENCES DUE

Differences due to or from a defaulter on the current settlement are to be set off against those due on the following settlement, such set off is not to be made until the differences become payable.

56. FRAUDULENT PREFERENCE

A member who shall have received a difference on an account or shall have received any consideration in any transaction prior to the date fixed for settling such account or transaction shall in the event of a default of the member from whom he received such difference or consideration refund the same to the Default Management Committee for the general benefit of the creditors, and any member who shall have given such difference or consideration to any other member prior to such settling day shall again pay or give the same to the Default Management Committee, in the event of the default of such other member.

57. CLAIMS OF DEFAULT MANAGEMENT COMMITTEE

A claim of one defaulter, whose estate is represented by the Default Management Committee against another defaulter shall not have any priority over the claims of other creditors but shall rank with other claims.

58. PRIOR CLAIMS

A claim of the Exchange or the clearing house when one is established against the estate of a defaulter shall be prior to the claims of other creditors.

59. PROCEEDINGS IN THE NAME OF DEFAULTER

(a) The Default Management Committee with the consent of the creditors of a defaulter shall be entitled to take any proceeding in a court of law either in their own names or in the name of the defaulter as they may be advised, for recovering any assets of the defaulter which they are entitled to recover under these rules.

(b) Payment to Default Management Committee

If a member takes any proceeding in a court of law to enforce any claim against a defaulters' estate arising out of any transaction for dealing in the market made subject to the rules of the Exchange and obtains a decree and recovers any sum of money therein, he shall pay such amount or any portion thereof, as may be fixed by the Board to the Default Management Committee.

60. DEFAULTERS' FAILURE TO SETTLE

(a) A members' card shall lapse to the Board immediately he is declared a defaulter under these rules.

(b) Such forfeited card shall be re-issued to the defaulter if he is re-admitted a member within six months from the date of default.

(c) If an application for re-admission by a defaulter be rejected by the Board, or if no such application be made within six months of the declaration of default the right of nomination of the defaulter may be disposed of by the said Board and the proceeds of the sale thereof shall be dealt within the manner provided in the rules.

61. GENERAL NOTICE OF DIVIDEND

(a) Not less than seven days, before declaring a dividend the Default Management Committee must post on the Notice Board of the Exchange a notice of their intention.

(b) Separate Notice

On the expiry of this notice, the Default Management Committee must give a separate notice to each creditor whose claims they have admitted.

Dividend for amounts exceeding Rs.20/- shall be paid through the cheque on any local bank approved by the Board.

(d) Cheque by Post

A Creditor may have his dividend cheque sent by post at his own request and risk.

62. UNCLAIMED DIVIDEND

If any dividend remains with the Default Management Committee unclaimed for more than one year or where after paying a final dividend any assets of the defaulter remain unclaimed or undistributed the same shall be paid into the funds of the Exchange. Unclaimed dividend means a dividend which has been declared on claims admitted by the Default Management Committee but which the member entitled (except in the case of a member who shall have died) has failed or neglected to claim.

63. DECEASED CREDITORS

If a member who is a creditor of a defaulter be dead, the dividend due to such member shall be paid to his legal representative. But if a creditor himself be a defaulter the dividend due shall be paid to the Default Management Committee for the benefit of his creditors.

64. RE-ADMISSION OF DEFAULTER

(a) Upon an application for re-admission by a defaulter, the Default Management Committee shall investigate his conduct and accounts and no further proceedings shall be taken by the Board with regard to his re-admission until the report of the Default Management Committee shall have been submitted together with a statement as to the defaulters estate signed by himself.

(b) The attention of the Default Management Committee shall be directed:-

i) To ascertain the total amount of his business assets and balances at his bankers during the previous three months, the highest volume of purchases and sales separately on any delay during the same period, the proportion of the total purchases and sales during that period on his own account and on account of his constituents.

ii) To ascertain the total amount paid to his estate specifying the sums collected in the Stock Exchange, those received from Principals, and those from the defaulter himself.

iii) To ascertain the conduct of the defaulter preceding and subsequent to his failure.

65. WHO MAY BE RE-ADMITTED

(a) The Board may subject to such conditions as they think fit only re-admit such defaulter as in their opinion:-

i) Has defaulted owing to the default of the principals whom he might reasonably have expected to be good for their-commitments.

ii) Has not been guilty of bad faith or breach of the rules.

iii) Has kept his operation within a reasonable proportion of his means or resources, and

iv) Has been irreproachable in his general conduct provided that he shall not be eligible for re-admission unless he has made bonafide money payment of not less than thirty seven paisas in the rupee of the amount of loss he has incurred.

(b) A defaulter shall not be re-admitted if his default has been contributed to by reckless dealings on his own account or his conduct has been marked by indiscretion and by the absence of reasonable caution.

66. RE-ADMISSION OF INSOLVENT

A member who as an insolvent has been declared a defaulter shall not be eligible for re-admission until he shall have paid one hundred paisas in the rupee.

67. NOTICE TO BE POSTED

A notice of every application by a defaulter for re-admission shall be posted on the notice board of the Exchange for at least fifteen days previous to his re-admission.

68. OBJECTION TO RE-ADMISSION

Any member or any other creditor intending to object to the re-admission of the defaulter shall communicate the grounds of his objection to the Board by a letter within fifteen days of the date of posting of the notice of the application for re-admission. All such objections shall be deemed privileged and confidential.

69. ASSESSMENT OF CLAIMS ON DEFAULTERS' ESTATE

A member being a creditor of a defaulter shall not sell, assign or pledge his claim on the estate of such defaulter without the consent of the Board.

70. DEFAULTER AS CLERK

Member may apply for the admission of a defaulter as his Clerk in the settling room but no such clerk shall be allowed to enter the market to effect bargains as an authorized clerk.

71. BUSINESS WITH DEFAULTER FORBIDDEN

A member shall not carry on business for or with a defaulter before his re-admission to the Exchange.

72. BUSINESS FOR INSOLVENT

A member may, with the sanction of the Board carry on business for a person who has ceased to be a member.

73. LIABILITIES OF PAST MEMBERS

A member who shall for any reason have ceased to be a member of the Exchange shall nevertheless remain liable for and shall pay to the Exchange to be a member shall have been due by him to the Exchange.

(a) Failure to Pay Dues

If a member fails to pay his annual subscription or any other money which may be due by him to the Exchange within a period of two months after the same have been become due the Secretary of the Exchange may by notice in writing request payment of the same. The notice shall appoint the day and place for payment.

(b) Suspension

If the requisitions of such notice be not compiled with, the Board may by a notice on the Notice Board of the Exchange suspend such member until he shall have paid his dues and such member remain suspended and debarred from exercising any of the rights and privileges of a member until by a further notice upon the Notice Board of the Exchange the suspension shall have been revoked.

If such member shall not within two months of his suspension pay his dues, the said Board shall direct a further notice to be served upon him requesting him to pay his dues within one month of the service at the time and place therein prescribed.

(d) Expulsion

If the requisition in such further notice are not compiled with the said Board may by a Resolution passed by a majority of three-fourths of the members of the said Board present at the meeting direct the name of such members to be removed from the list of members of the Exchange and thereupon such member shall cease to be a member and shall be deemed to have been expelled and his card to have become the property of the Exchange. Notice of such Resolution shall be posted forthwith on the Notice Board of the Exchange.

(e) Re-admission

The said Board may on an application of a member whose name has been removed under the provisions of these rules within one year of his removal and on cause being shown to the satisfaction of the said Board rescind its Resolution by a like majority, provided all dues of such member to the Exchange opt date are fully paid up.