IN RE: POWER EXCHANGE INDIA LIMITED Vs. STATE

JUDGEMENT

(1.) THE petitioner, Power Exchange India Limited (PXIL) has filed Petition No. 322/RC/2013 for extension of time for compliance of net worth and Petition No. RC/003/2014 for compliance with the shareholding pattern as required under the provisions of the Central Electricity Regulatory Commission (Power Market) Regulations, 2010 (hereinafter referred to as "Power Market Regulations"). Since the issues of net worth compliance and shareholding pattern compliance are interrelated, both the petitions are being disposed of through a common order.

(2.) POWER Exchange of India Limited was accorded permission to set up and operate a Power Exchange vide order dated 27.5.2008 in Petition No. 21/2008 in accordance with the provisions of the guidelines issued by the Commission in order dated 6.2.2007 in Petition No. 155/2006 (suo motu). The Commission notified the Power Market Regulations which came into effect from 21.1.2010. Power Exchange of India Limited was deemed to have been regulated under Regulations 19 of the Power Market Regulations.

(3.) THE net worth and shareholding pattern requirement as specified in the Power Market Regulations are extracted as under: 18 (i). A Power Exchange shall always have a minimum networth of Rs. 25 crore: Provided that the Power Exchange shall always maintain the above networth and in case the same depletes due to payment made by the power Exchange to sellers/buyers in default including by the usage of the SGF impacting its networth, the Power Exchange shall increase its networth to comply with the above networth criteria within 3 months from the date of depletion. Provided that if and when a Power Exchange separates its clearing function to a Clearing Corporation, it shall be required to have a minimum networth of Rs. 5 crore. Provided further that the Commission may, by general order, review the networth criteria from time to time. 19. Shareholding Pattern of Power Exchange 2. THE shareholding pattern for equity holders in the Power Exchange shall be as follows: i) Any shareholder other than a Member of the Power Exchange can have a maximum (whether directly or indirectly) of 25% shareholding in the Power Exchange. (ii) A Member of the Power Exchange can have a maximum (whether directly or indirectly) of 5 % shareholding in the Power Exchange. (iii) In total, a Power Exchange can have a maximum of 49% of its total shareholding owned by entities (whether directly or indirectly) which are Members of the Power Exchange. Explanation I -"indirectly" means through an associate where an associate is - (i) one who owns or controls shares carrying not less than twenty -six percent of the voting rights of the shareholder intending to hold equity in the power exchange; or (ii) in respect of whom the shareholder intending to hold equity in the Power Exchange owns or controls shares carrying not less than twenty -six percent of the voting rights; or (iii) one who is under the same management as the shareholder intending to hold equity in the power exchange. Explanation II: An associate shall be deemed to be under the same management: (i) if the managing director or manager of the shareholder intending to hold equity in the power exchange is the managing director or manager of the associate; or (ii) if a majority of the directors of the shareholder intending to hold equity in the power exchange constitute or any time within six months immediately preceding, constituted a majority of the directors of the associate; or (iii) if not less than one third of the total voting power with respect to any matter relating to the shareholder intending to hold equity in the power exchange and the associate is exercised or controlled by the same individual or body corporate; or (iv) if any of the directors of the shareholder intending to hold equity in the power exchange while holding the majority of shares of such shareholder also holds the majority of shares in the associate. The share holding pattern shall be reported to the Commission from time to time.