• The exchange should arrange for well equipped and trained manpower to carry out the activities of the BDC, further it should have a verification officer who will decide the validity of objections. Since the quality of decision is critical, the verification officer should be a senior qualified person.
• The plastic pouches to be used for reporting objections should be of good quality and transparent so that the contents can be viewed from outside.
• The BDC form should be placed on top of all documents inside the pouch so that the details on the form are clearly visible from outside the pouch.
• Members/stock exchanges should strictly adhere to the formats of the BDC form (as given in the Annexure).
• In case the BDC of the last exchange does not receive the rectified/replaced shares or the close-out amount within the specified time frame, such should be referred to the Inter Exchange Arbitration Panel.
• The exchange should maintain a register which would contain the details (as per Annexure B1 and B2) pertaining to all objections reported to the BDC. Separate register should be maintained for local and inter exchange objections.
• The exchange should forward to SEBI monthly status reports giving details on the objections received, objections resolved, objections referred for arbitration, value of objections, reasons for objections, list of companies and Registrar and Transfer agents related to the objections reported.
• Stock exchanges should get into a contract with a reliable courier agency for couriering objection documents from one BDC to the other.
• Stock exchanges are also required to arrange for adequate insurance covers for the documents which might be reported as lost in transit.
• In cases where odd lot shares reported as objection are not rectified, such cases will be closed as per close out procedures.
• In case the shares reported as objection fall in the no delivery period, then such shares will not be rectified within 21 days but will become due for rectification only on expiry of the no delivery period.
• The members delivering the rectified shares should ensure that the shares are good delivery as per the Good/Bad delivery guidelines issued by SEBI. The rectified shares should have a new transfer deed so that the party receiving the rectified shares can sell the rectified shares in the market if he so desires, and not necessarily send the shares for transfer back to the company.
• BDC will verify the validity of all objections being sent for rectification or being received after rectification in case of inter exchange objections.
• In case shares are lodged after Book Closure or Record date and such shares are returned under company objection then such objections can be reported to the BDC but no claim can be made for Corporate Benefits accruing from such shares. Claim of corporate benefits will be considered only as request matter.
• In case it is not possible to attach the original objection memo, a copy of the memo duly certified by the receiving member should be used.

In case where the first introducing member is the member of a exchange who has put first stamp on the transfer deed, and he has entered into a trade through a member of another exchange (meaning that the first introducing member has a relationship of client to the second introducing member), in such cases the objection should be reported against the second member and not against the first introducing member.

The exchange may collect from the members a service charge for processing objections through the BDC. Such service charges may be collected through prepaid coupons attached to the objection or through computerised billing. The service charge will be payable per objection submitted by a member. Preferably the charges should be marginally higher to help BDC to develop their own reserve of recyclable funds over a period of time.

• Since the processing of objections will involve stock exchanges form various parts of the country, it is suggested that the BDC forms should be filled in English which is accepted by all the Stock Exchanges as the common business language.
• The BDC inward no. will be an eight digit number. The first two digits will be the exchange code of the last exchange followed by a six digit unique serial number.
• The BDC inward no. assigned to an objection should be used as a reference number by all the BDC’s for all future communications related to that particular objection.
• Members are required to use the relevant objection codes based on the reason for objection as given on the reverse of the form.

Local Exchange :

Incase the introducing member of the local exchange has been declared as a defaulter, the receiving member has to file a claim with the Defaulter’s Committee/Clearing Corporation for resolving the claim for company objection.

Inter Exchange :

Incase the introducing member of the first exchange has been declared as a defaulter, the receiving member of the last exchange will report the objection for rectification to the introducing member of the last exchange. The introducing member will rectify/replace the objection and return the same to the BDC of the last exchange within 21 days as is the normal practice.

The introducing member of the last exchange will in turn report the objection for rectification to the BDC of the last exchange. The BDC of the last exchange will forward the documents under objection to the BDC of the first exchange. The BDC of the first exchange will forward the documents to the last member of the first exchange for rectification within 21 days. The last member of the first exchange will then file a claim with the Defaulter’s Committee/Clearing Corporation of the first exchange for resolving the company objection.

In case introducing members are not able to rectify the complete lot of objections reported, they will be allowed to submit rectified objections in part provided the rectified quantity is in a market lot.

In case an odd lot is reported as an objection, the introducing member is required to rectify/replace either the entire odd lot or in case of partial rectification, the member is required to rectify in a market lot.

The introducing member will settle the benefit claimed in proportion to the quantity of shares rectified/replaced by the member.

Claims for benefits can be made in the following cases :

• Where the book closure/record date (BC/RD) for the corporate benefit claimed has passed before the reporting day, or
• Where BC/RD for the corporate benefit claimed falls after the reporting day but before the rectification pay-out day, or
• Where the BC/RD for the corporate benefit claimed falls after the rectification pay-out day but within 15 days from rectification pay-out day.