Committee

Functioning

Incorporated

Capital

G.S patel committee,

Abid Hussain committee .

October 1990

September 1992

8 crore.

ESTABLISHMENT

OTCEI was needed to solve the problems of small investors and company

SMALL INVESTORS

ACCESS LIQUIDITY

DELAY IN PAYMENT

& DELIVERY

UNCERTAINTY REGARDING

PRICES

Problems of company were:

PROBHITIVE ISSUE COST

ADMINISTERED PRICING OF ISSUE

RESTRICTED

ACCESS TO

MARKET

OTCEI COUNTER

UTI

ICICIIDBI

IFCI

GIC SBI

Capital M

arket

Canbank

Financial

services

LIC

Elimination of Trading

Ring

Executive Trading

Computerised Trading

Nationwide Reach

FEATURES OF OTCEI

Individuals ,partnership firms and

corporate entities Minimum net worth of Rs. 5 lakhs

Adequate office space and

telecommunication facilities

Have to pay one time non refundable admission fee of Rs.

2 lakhs

Annual subscription fee of Rs. 5,000 The individual

should be at least a graduate

WHO CAN BE DEALERS

Public Financial institutions , Scheduled banks, Mutual funds, venture capital funds. Minimum net worth Rs. 2.5 crores Must pay admission fee of Rs. 10 lakhs and Rs. 5 lakh after

one year Annual Subscription fee is Rs 1 lakh Act as brokers who buy and sell securities Quote prices and perform vital function of sponsorship

WHO CAN BE MEMBERS

Trading from distant

locations

Transparency in Dealing

Easy Access

Appraisal by sponsor

Quick Settlements

BENEFITS OF OTCEI

PROCEDURE OF LISTING

The sponsor determines the price of the company shares offered to the public , members and dealers of the OTCEI

The sponsor gets all statutory consent and compliance with all SEBI.

An OTCEI member is appointed as a sponsor of the company`s issue. He appraises the project / company on technical, managerial, commercial, economical and financial aspects .

The listing application has to be made to the OTCEI as per its rules and regulations

After getting approved, the allotment is made.

The sponsor registers the issue with OTCEI and places the equity

Listing fees - initial listing fee of Rs. 6000 and an annual fee of 0.05% of its subscribed capital

The company must have a minimum issued equity capital of ` 30 lakh

Companies with an issued equity capital >` 30 lakh < ` 300 Lakh, the minimum public offer should be 40% of the issued capital

GOVERNMENT GUIDELINES FOR LISTING

The companies with an issued equity capital > ` 300 lakh will follow the listing requirements and

guidelines.

The companies engaged in investing, leasing, finance, hire-purchase , amusement parks etc are

not eligible for listing

A company with capital > ` 10 crore will not be eligible for listing.

The company can go public on the OTC exchange by two methods

METHOD OF OFFER

PRIMARY ISSUE SECONDARY

ISSUE

TRADING MECHANISM

BANK

Registrar

Counter A Counter B

OTC Central Computer

Telecom Mobile

PTI Computer

At present the settlement procedure has five days trading cycle

Short sales and squaring up have to be done with in the trading cycle and certificate to the investors must be delivered within a fortnight from the date of purchase . It avoids the speculation

Forward trading is not allowed in OTCEI

This settlement procedures are different for the listed securities and the permitted securities

SETTLEMENT SYSTEM

AKHIL 8215.4(A)