Primary Market - Public Issues - Central Listing Authority - Structure & Functions
Securities and Exchange Board of India (Central Listing Authority) Regulations, 2003

SEBI promulgated Securities and Exchange Board of India (Central Listing Authority) Regulations, 2003 on 21st August 2003 to give effect to the decision of the Central Government to etablish a Central Listing Authority to help bring in uniformity in bourse listing process for corporates and to bring about the uniformity in the due diligence process in scrutinising listing applications across the stock exchanges. CLA as per the regulations is an autonomous body not falling under the SEBI purview but represented by bourses. Once the Authority is constituted in terms of the Regulations thereafter no listing on stock exchanges would be allowed unless it is accompanied by a recommendation letter from CLA. In short CLA would act as a single nodal agency responsible for ensuring quality of listings, continued compliance, timely dissemination of information and action against erring companies. After getting a CLA approval, the company can apply to any other exchange for listing. We will study the structure and functions of CLA as envisaged under the SEBI regulations in detail.

1. Letter Precedent to Listing: means a letter issued by the Authority under regulation 12, permitting the applicant to make a listing application to any exchange, including for relisting and listing of an already listed security at an exchange other than the exchange where it is presently listed;

2. Listing Agreement: means the agreement that is entered into between an exchange and an applicant under which the securities are listed and dealt with in the concerned exchange;

3. Listing Application: means an application made by an applicant, under applicable laws, to an exchange for permission for its securities to be listed and dealt with in the exchange;

   Explanation: An application to any exchange for obtaining any prior ‘in principle’ approval or for obtaining the comments or observations of the exchange on such application shall not be deemed to be a listing application for the purposes of these regulations;

4. Listing Conditions: means the conditions to be fulfilled by a company or other body corporate, mutual fund or collective investment scheme for the purpose of getting its securities listed on an exchange. The conditions are included in the Listing Agreement.

Establishment of the Central Listing Authority (Regulation 3)

As per the regulation the CLA would be established with effect from such date as may be specified by the Board and with effect from such date, the Board shall be deemed to have delegated its functions and powers, as are specified herein, to the Authority. The head office of the Authority is be located in Mumbai. The Authority may, with prior approval of the Board, establish such branch or regional offices as may be necessary.

Composition of the Central Listing Authority (Regulation 4)

The Authority shall, be composed of not more than eleven Members comprising of:

1. a President;

2. a Vice President; and,

3. not more than nine other Members.

The President, Vice President and the Members shall be appointed by the Board from amongst eminent persons of demonstrated integrity and outstanding technical and professional ability, and drawn from the judiciary, the legal profession, the academia, investor associations, exchanges, and experts in securities market or finance. Of the 9 members not more than three Members shall be representatives of exchanges, depositories, clearing corporations or other institutions related with the securities market. The Chief Executive Officer of the Authority shall be the ex-officio Member-Secretary of the Authority.

The President, Vice President and each Member shall be appointed for a term of three years.A Member shall be eligible for reappointment. A Member shall not be eligible for re-appointment as a Member or as a President or as a Vice President, if he has already served for two terms.

The Board may, for reasonable cause, remove the President, Vice President or a Member after communicating the reasons for such removal and providing an opportunity of being heard by the Board

Secretariat (Regulation 5)

The Authority may have a secretariat to assist it in the discharge of its functions. The Authority shall, in consultation with the Board, appoint a Chief Executive Officer of the Authority who shall perform such functions as may be specified by the Authority. The personnel for the secretariat may be appointed by the Authority or obtained from SEBI on deputation.

Meetings of the Authority (Regulation 6)

The Authority may meet from time to time for the despatch of business, adjourn, re-schedule and otherwise regulate its meetings, as it thinks fit. The President may, either on his own volition or upon request by a Member, summon a meeting of the Authority. The President, and in his absence the Vice President shall chair all meetings and in the absence of both of them in any meeting, the Members present shall appoint one of them to chair the meeting. The Chief Executive Officer being the ex officio Member-Secretary shall be responsible for all administrative functions in relation to the meetings.

The quorum for any meeting of the Authority shall be four Members: Provided however, that in a meeting for considering an application for a letter precedent to listing, Members who are representatives of exchanges shall not be considered for the purpose of quorum. Questions arising at any meeting of the Authority shall be decided by a majority vote of the Members present and voting in such meeting: Provided that in case of an equality of votes, the President, or in his absence the person presiding, shall have a second or casting vote. Decisions of the Authority may also be taken by circulation, provided the resolution has been circulated in draft, together with the necessary papers, if any, to all the Members in advance.

The Authority may delegate any of its functions and powers to any committee consisting of such Members as it may determine. Any committee so formed shall in the exercise of its powers or in the performance of its functions so delegated, conform to such procedures or conditions that may be specified by the Authority. Questions arising at any meeting of a committee shall be determined by a majority of the Members present and in case of an equality of votes, the matter shall be referred to the Authority for its consideration and decision thereon.

Functions of the Authority (Regulation 8)

The Authority shall perform the following functions :

1. to receive and process applications for letter precedent to listing from applicants and issue, if it deems fit, a letter precedent to listing to any such applicant;

2. to make recommendations to the Board on issues pertaining to the protection of the interest of the investors in securities and development and regulation of the securities market, including the listing agreements, listing conditions and disclosures to be made in offer documents; and,

3. to undertake any other functions as may be delegated to it by the Board from time to time.