Procedure to be followed by the Member for reporting Local Exchange Objections to the BDC of the local exchange

The shares under objection are required to be lodged by the receiving member of the local exchange with the BDC of the local exchange in the prescribed form BDC-1A. Claims for corporate benefits (if any) should also be made in form BDC-1A. Members will be required to report such objections to the exchange on the days specified by the exchange (see schedule)

• The following documents are required to be enclosed.

• Form BDC-1A in triplicate
• Original Transfer Deed
• Share Certificate
• Original Company Objection Memo or Certified copy of the memo.
• In case of fake/forge/stolen/missing shares, all documents as given in SEBI Good/Bad Delivery guidelines no. 108/109. (as per annexure-C)

1. All the documents as given in point 2 are required to be lodged by the receiving member of the local exchange with the BDC of the local exchange in a sealed plastic pouch. Form BDC-1A is required to be submitted in triplicate, of which one copy should be attached on the pouch, and the remaining two copies should be attached to the documents and placed inside the pouch.
2. The local exchange will give an acknowledgement to the receiving member on the third copy of Form BDC-1A which is attached outside the pouch. This acknowledgement will be given by using a rubber stamp and will bear the words "subject to verification/counting".
3. The BDC of the local exchange will retain one copy of Form BDC-1A for its records, while the copy of Form BDC-1A attached to the documents will be handed over to the introducing member of the last exchange.
4. If all the shares (pertaining to the same company), have been introduced by the same introducing member, then the receiving member must report this as one objection (i.e. in one form BDC-1A). On the other hand, if the shares have been introduced in the local exchange by more than one introducing member, then the receiving member must report the objections separately for each introducing member using a separate form BDC-1A and in separate pouches.
5. The BDC of the local exchange will alot a unique serial number (BDC Inward No.) to each objection case reported by the receiving member.
6. The BDC of local exchange will verify/count the documents enclosed by the member. If the contents of the pouch are not in order the same will be returned to the receiving member of the exchange.
7. a) In the event that the BDC is not equipped to carry out the verification/counting the BDC will sort the documents introducing memberwise and handover the documents to the introducing member within 24 hours of receipt of such objections.

b) The introducing member will count the securities on the counter and give an acknowledgement to the BDC for the number of securities received. The verification for the correctness of the objection will be done later. During the process of verification, if the introducing member, finds that the objection is incorrect, he will return the objection to the BDC within 7 days alongwith form BDC-3A. The BDC will give an acknowledgement on form BDC-3A to the introducing member.
c) If the BDC is satisfied with the claim of the introducing member regarding the invalidity of the objection, then the documents will be returned to the receiving member. If the BDC finds that the objection is valid then the introducing member will be required to accept and rectify the objection.

8. The BDC of the local exchange will sort all the objections received, in the order of introducing member.
9. The BDC of the local exchange will forward the pouch containing the objections to the introducing member of the exchange within 3 days of receipt of such objections. The introducing member will acknowledge the receipt of such objections by affixing his rubber stamp and initials on the copy of Form BDC-1A retained by the exchange. The BDC will stamp the date by which the shares are to be rectified or replaced by the introducing member (i.e. 21 days). The stamp will be put on form BDC-1A/1B in a different colour while giving acknowledgement copy to the introducing member.
10. The first introducing member is required to rectify/replace the shares within 21 days. If the introducing member fails to rectify/replace the shares within 21 days, the local exchange will close out the transaction without going through the auction process. (see close-out procedures)
11. The first introducing member will enclose the following documents while rectifying/replacing the shares under objection.

• Prescribed form BDC-2A in triplicate
• Rectified/replaced shares
• Benefits (if any) due
• Copy of form BDC-1A
• Copy of the company objection memo
• Cheque for value of transfer stamps or corporate benefits

The introducing member of the exchange will hand over the documents mentioned in point 12 above in a plastic pouch on the rectification day to the BDC of the last exchange. The BDC of the local exchange will return one copy of form BDC-2A to the introducing member after acknowledging the receipt of rectified shares by affixing a rubber stamp bearing the words "subject to verification/counting". One copy of Form BDC-2A will be retained by the local exchange and the last copy of Form BDC-2A alongwith the rectified documents will be returned to the receiving member of the local exchange.

• The cheque shall be in favour of the receiving member who has reported this objection to the BDC of the local exchange for rectification.
• The BDC of the local exchange will hand over the rectified/replaced shares/cheque and corporate benefits back to the receiving member of the local exchange within 7 days of the rectification day.
• If the introducing member of the exchange fails to rectify/replace the shares under objection by the prescribed rectification day the exchange will close the transaction without conducting any auction. (see close-out procedures)

Incorrect reporting of Company Objections

• If the introducing member of the local exchange finds that the objection/corporate benefits has been wrongly reported against him, the member should report such cases to the BDC of the local exchange by filling in form BDC-3A alongwith a copy of the form BDC-1A. The shares received under objection alongwith form BDC-3A should be handed over to the BDC of the local exchange.
• The introducing member of the local exchange is required to report such cases to the BDC of the local exchange within a period of 7 days from the date of receipt of such objections, failing which it will be understood that the introducing member has accepted the objections corporate benefits reported against him and will be required to rectify/replace the shares by the rectification day or else the exchange will close-out the shares as per the exchange procedures.
• The BDC of the local exchange will return the shares wrongly reported as objection back to the receiving member of the last exchange.
• In case of invalid claim of Corporate Benefits the introducing member must submit only the form BDC-3A duly authorised by the BDC official (Verification Officer) of the Exchange alongwith a copy of form BDC-1A. In such cases the introducing member shall retain the shares and rectify the same within the stipulated time. The BDC of the exchange will verify that the claim for Corporate Benefit is invalid before authorising the claim as invalid. After authorising that the claim is invalid, the BDC of the local exchange will forward one copy of form BDC-3A to the receiving member.

Non rectification of Shares or Bad delivery of rectified/replaced shares submitted Under Objection.

• If the receiving Member of the exchange finds that the shares received by way of rectification or replacement are not correctly rectified or the shares are bad delivery, the receiving member is required to report such cases in prescribed form BDC-4A (in triplicate) to the BDC of the local exchange alongwith a copy of Form BDC-1A and 2A within 48 hours of receipt of such shares.
• If the receiving member finds that the benefits claimed are not correctly rectified then the receiving member should accept the rectified shares and report only the non-rectified benefits claim to the BDC of the local exchange.
• The BDC of the local exchange will verify these shares/benefits and if the shares/benefits are genuinely found to be bad delivery then the exchange will close-out such cases as per exchange procedures. The introducing member will be intimated that the deal is being closed out and that his account will be debited accordingly. The intimation will contain full details regarding the close out.

If the rectified/replaced shares are again returned under objection by the company such shares will be deemed as "Second time objections".

1. The receiving member of the local exchange will report the shares under second time objection to the BDC of the local exchange in the form for second time objections. Form for Second Time Objections will be in the same format as BDC-1A/1B but will be of a different colour (pink colour) and have the words "SECOND TIME OBJECTION" written in bold on the top of the form.

The following documents are required for reporting second time objections.

• Fresh copy of form for second Time objections (in triplicate)
• Transfer deed and share certificates returned by the company
• Company objection memo
• A copy of Form BDC-1A and 2A which have been used for reporting the first time objection.
• The documents mentioned in point 3 above are required to be submitted in a plastic pouch.
• All the Second Time objections will be straightaway closed out. (see close out procedures)

In case the introducing member fails to rectify/replace the shares within the stipulated time the deal will be closed out at the following price:

• Highest of six months price or highest of ex-date price, whichever is later OR
• 20% over the closing price on the last rectification day whichever is higher

In such cases, the introducing member is required to forward a cheque equivalent to the close-out amount and the benefits claim amount (if any) to the BDC of the local exchange in favour of the receiving member of the last exchange.

Corporate Benefits

• Members are required to claim corporate benefits while submitting the shares for company objection in form BDC-1A. Once the claim for benefits has been made by a member, the member cannot refuse to accept the corporate benefits.
• If the market rate of the corporate benefit is less than the cost of procurement of the benefit then such benefit will not be taken up for settlement.
• If the member is not in a position to submit the corporate benefit in the form of shares then he should submit a cheque as per the valuation given in annexure-A alongwith form BDC-2A.
• Rectified company objections will be accepted by the BDC of the local exchange only if they are accompanied with the corporate benefits (either in the form of shares or equivalent value in the form of cheque in favour of the receiving member) claimed as per form BDC-1A.

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