The Bombay Stock Exchange dropped its plan on Tuesday to issue bonus shares to members and instead decided to come out with a rights issue.
The move aims at raising its capital base to make itself eligible for an initial public offering.
At its annual general meeting, the first after its corporatisation, the BSE also declared 1,000 per cent special dividend for members in addition to the regular 132 per cent dividend.
The proposed rights issue is expected to raise BSE's paid-up capital to Rs 3 crore (Rs 30 million) from Rs 6800,000, making Asia's oldest exchange eligible for an IPO. Under the BSE regulations, companies that plan to list on the exchange must have a minimum capital base of Rs 3 crore.
"The AGM approved the rights issue proposal instead of an earlier proposal for bonus shares because the Securities
and Exchange Board of India does not allow issuance of bonus shares," a BSE member said.
The BSE wants to bring down members' stake to 49 per cent in two stages -- a 26 per cent stake sale to strategic investors and an IPO for another 25 per cent.
Sources said the AGM cut short discussions over the 26 per cent stake sale to a strategic investor and the members were told that the BSE was awaiting merchant banker Kotak Mahindra Capital's valuation for finding a strategic partner.
"The New York Stock Exchange and Nasdaq have already evinced interest in the deal. Talks are on. As our valuation emerges, the process will gain pace," the member said.
Do you want to discuss stock tips? Do you know a hot one? Join the Stock Market Investments Discussion Group