NATIONAL COMMODITY & DERIVATIVES EXCHANGE LIMITED

Circular to all trading and clearing members of the Exchange

Circular No.: NCDEX/MEMBERSHIP-010/2017/225

Date: September 07, 2017

Subject : Submission of Annual Return 2016-17

In terms of Regulation 7.2.3 of Regulations of the Exchange, members are hereby advised to submit the Annual Return for the financial year ended 2016-2017.

All members who have been activated for trading prior to April 1, 2017 are required to submit their Annual Return latest by October 31, 2017, in respect of financial year ended March 31, 2017.

The members having financial year ending other than March 31, 2017 are required to submit the said Annual Return within a period of 6 months from the close of their respective financial year. Such members are required to inform the Exchange of the different financial year followed by them within 15 days of this circular. If the members have changed their financial year from the one followed earlier, they shall also convey such details to the Exchange within 15 days of this circular.

Members, who have already submitted any of the documents which are prescribed in this circular for any other purpose, are required to upload the said documents pursuant to and in compliance with this circular.

Online submission of Annual Return through NCFE:

Members are hereby informed that the Exchange has upgraded the system for online submission of Annual Return on NCFE portalwherein membersare required to enter all the details and upload the necessary documents as prescribed intheAnnual Return module on NCFE. Annual Returns are required to be submitted only by way of uploading in anelectronic format through NCFE by October 31, 2017.No physical copies should be submitted to the Exchange.

User manual forprocedure foronline submission of Annual Return through NCFEis available atftp://extranet.ncdex.com/common/NCDEXDocuments/NCFE/UserManual/and also available in downloads section of NCFE portal. (Downloads - Download Files- NCFE-User Manual- User Manual Annual Return)

Checklist for submission of Annual return and Action for non-compliance are provided as Annexure I and II respectively.

Members are requested to ensure that allapplicable documents are uploadedbefore the due date. Incorrect / Incompletesubmission of Annual return, if any, observed during the scrutiny would be construed as non-submission and will attract non- submission /late submission charges/ any other action that the Exchange may deem fit.

Members may please note that mere submission of documents through Annual Returns will not result in simultaneous updation of records at the Exchange and Members are required to follow the laid down procedure for obtaining approval/intimation to the Exchange, as the case may be, for changes already carried out.

Members are advised that trading terminals of those members who fail to submit their Annual Returns by March 31, 2018, will be placed on square off mode effective April 01, 2018.

For and on behalf of

National Commodity & Derivatives Exchange Limited

Seema Nayak

EVP - Enforcement

For further information / clarifications, please contact

1. Customer Service Group on toll free number: 1800 26 62339

2. Customer Service Group by E-mail to:

Annexure I – Checklist for submission of Undertaking

  1. All submissions should be as on 31 Mar 2017
  2. Submission of Audited Annual Accounts (Balance sheet, Profit Loss account, Schedules & Notes, Auditor’s Report and Director’s Report) should be in the format as prescribed under Companies Act 2013, irrespective of whether they fall under the purview of Companies Act 2013 or not. The same should be stamped and signed by Directors and Auditors.
  3. Net worth Certificate and Computation page should be calculated as per L.C. Gupta method (Refer format provided on Net worth tab in annual return on NCFE portal )
  4. CA certified undertaking with respect to Annual return submissions should be in format as prescribed by the Exchange in certification tab in annual return on NCFE portal
  5. For all submissions in respect of annual returns to be uploaded in NCFE portal, data values should be updated in actual numbers and not converted in lakh or crores.

Annexure II - Action for Non-Compliance:

  1. Non Submission of Annual Return :

All members are required to ensure that they upload all the details and documents through the NCFE system in the prescribed formats, as applicable, on or before October 31, 2017 in order to avoid any late / non-submission charges. Further, non-submission of any of the documents forming part of the Annual Return or submission of documents in other than the prescribed format would be construed as non-submission of Annual Return and non-submission charges would be levied @ Rs. 200/- per day with effect fromNovember 01, 2017 till the date of actual submission.

  1. Minimum Net worth Requirement :

All the members of the Exchange are required to maintain Net worth at all points of time as prescribed by the Exchange. In case the Net worth is below the prescribed minimum, the Exchange would initiate appropriate disciplinary action including the following.

​Matrix for blocking Base capital/Additional Base Capital:

Type of Membership / Prescribed Net worth / Shortfall of Net worth / Action by the Exchange
Trading Members / For Corporate: Rs. 25 Lakh
For other than corporate: Rs. 10 Lakh / If net worth falls below prescribed limit / Trading terminal shall be disabled
Trading Cum Clearing Members / Rs. 1 Crore / If net worth falls below Rs.1 crore but not less than Rs. 90 lakh / Base Capital / Additional Base Capital up to Rs. 12,50,000 shall be blocked and will not available for margin purpose.
If net worth falls below Rs. 90 lakh but not less than Rs. 75 lakh / Base Capital / Additional Base Capital up to Rs. 25, 00,000 shall be blocked and will not available for margin purpose.
If net worth falls below Rs. 75 lakh but not less than Rs. 50 lakh / Base Capital / Additional Base Capital up to Rs. 50, 00,000 shall be blocked and will not be available for margin purpose.
If net worth falls below Rs. 50 lakh / Trading terminal shall be disabled
Strategic Trading Cum Clearing Members* / Rs. 3 Crore / If net worth falls below Rs. 3 crore but not less than Rs. 2.70 crore / Base Capital / Additional Base Capital up to Rs. 17,50, 000 shall be blocked and not be available for margin purpose.
If net worth falls below Rs. 2.70 crore but not less than Rs. 2.25 crore / Base Capital / Additional Base Capital up to Rs. 35, 00, 000 shall be blocked and will not be available for margin purpose.
If net worth falls below Rs. 2.25 crore but not less than Rs. 1.5 crore / Base Capital / Additional Base Capital up to Rs. 52, 50,000 shall be blocked and will not be available for margin purpose.
If net worth falls below Rs. 1.5 crore / Trading terminal shall be disabled
Professional Clearing Members* / Rs. 10 Crore / If net worth falls below Rs. 10 crore but not less than Rs. 9 crore / Base Capital / Additional Base Capital up to Rs. 12,50,000 will be blocked and will not be available for margin purpose.
If net worth falls below Rs. 9 crore but not less than Rs. 7.5 crore / Base Capital / Additional Base Capital up to Rs. 25,00,000 will be blocked and will not be available for margin purpose.
If net worth falls below Rs. 7.5 crore but not less than Rs. 5 crore / Base Capital / Additional Base Capital up to Rs. 50,00,000 will be blocked and will not be available for margin purpose.
If net worth falls below Rs. 5 crore / Trading terminal shall be disabled

Note: In case of STCMs/PCMs, if net worth falls below prescribed levels, other than blocking of Base capital/Additional Base Capital, STCMs/PCMs will be allowed 3 months` time to increase their net worth (under intimation to the TMs associated with such STCM/PCM) - failing which, they will not be allowed to clear trades of TMs affiliated to them. TMs associated with such STCM/PCM may make alternative clearing arrangements during this three month period. The Exchange will also not allow any new TMs being affiliated to these STCMs/PCMs

  1. Any change in Shareholding Pattern (SHP)/Sharing pattern, Dominant Promoter Group (DPG). Designated directors requires prior approval of the Exchange. In case, the changes in SHP/DPG have been carried out by the member without the prior approval of the Exchange, such changes will be treated as violation and will attract penalties as per our Circular No. NCDEX/COMPLIANCE-001/2010/089 of April 1, 2010. The applicable penalties will be recovered as soon as such violations are noticed from the Annual Return submitted by the members. Exchange may also take any other action apart from levying penalties prescribed in our above circular, including placing the trading terminals on square off mode.

Particular / Penalty Amount
Any change in the shareholding pattern / profit sharing ratio without the prior approval of the Exchange involving dilution not below the minimum prescribed shareholding of the dominant promoter group / Rs.10,000/-
Any other change in the shareholding pattern / profit sharing ratio of the Trading Member without the approval of the Exchange, where the percentage of DPG remains same / Rs.5,000/-
Change in the shareholding pattern without the approval of the Exchange which has resulted in the dilution of the shareholding / profit sharing ratio of the dominant group below 51% / Rs. 1,00,000/-
  1. Any change in designated directors requires prior approval of the Exchange. In case, the changes in designated directors have been carried out by the member without the prior approval of the Exchange, such changes will be treated as violation and will attract penalties. The applicable penalties will be recovered as soon as such violations are noticed from the Annual Return submitted by the members.

Formats

  1. Net Worth Tab

(To be provided on the Letterhead of the certifying Chartered Accountant)

Annexure: C-1

Certificatedated submittedby (TMID)to NCDEX

CERTIFICATE

This is to certify that the Net worth of M/s./Mr./Ms. ______as on ______as per the statement of computation of even date annexed to this report is Rs. ____ Only (Rupees (in words) ______calculated as per L.C. Gupta method of Annexure C – 1A.

We further certify that:

  • The computation of net worth based on my/ our scrutiny of the books of accounts, records and documents is true and correct to the best of my/our knowledge and as per information provided to my/our satisfaction.
  • The computation of net worth is in accordance with method of computation prescribed by Dr. L. C. Gupta method committee report.
  • We hereby confirm that we are not the related party to the aforesaid entity.

Place:For (Name of Chartered Accountant Firm)

Date :

Name of the Partner/Proprietor Chartered Accountant

CA Stamp and Membership Number

(To be provided on the Letterhead of the certifying Chartered Accountant)

Annexure C – 1A

Computation of Networth as on………………… prescribed by Dr. L.C. Gupta Committee is as follows:

A. / Capital
B. / Frees Reserves
C. / Less Non-allowable assets viz.,
(a)Fixed Assets
(b)Pledged Securities
(c)Member’s card
(d)Non-allowable securities (unlisted securities)
(e)Bad deliveries
(f)Doubtful Debts and Advances*
(g)Prepaid expenses, losses
(h)Intangible Assets
(i)30% of Marketable securities
D. / Total Net Worth(A+B+C)

*Explanation:

Includes debts/advances overdue for more than three months or given to associates

For (Name of Chartered Accountant Firm)

Place: Name of Partner/Proprietor

Chartered AccountantDate: CA stamp and Membership Number

  1. DPG Tab

(In case where corporate undertaking is selected)

BOARD RESOLUTION

Certified true copy of the Resolution passed at the meeting of the Board of Directors of ______(Name of the Company) held on ______(Date) at ______(Venue).

Resolved that the company do extend its unconditional and irrevocable support in favor of Mr./Ms. ______, for the purpose of determining the dominant group in M/s. ______(Member) and accordingly, execute necessary documents including an irrevocable undertaking to give effect to the same and submit it to National Commodity & Derivatives Exchange Limited. Resolved further that Mr./Ms. ______, Director(s) of the company be and is / are hereby authorised to execute necessary documents including undertakings as prescribed by NCDEX form time to time.

Certified to be true

For______(Name of the Company)

______(Signature)

  1. Certification Tab

Format for CA Certification

(To be provided on the Letterhead of the certifying Chartered Accountant)

I/We hereby state that the information provided in annual return are true, correct and complete based on my/ our scrutiny of the books of accounts, records and documents to the best of my/our knowledge and as per information provided to my/our satisfaction.

We hereby confirm that we are not the related party to the aforesaid entity.

For (Name of Accounting Firm)

Name of Partner/Proprietor

Chartered Accountant

CA Stamp & Membership Number

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