 "Sebi may cap positions one can hold as an independent director")
Sebi Chairman U K Sinha on Saturday said the market regulator was waiting for enactment of the new companies law and would take up the issue of corporate governance structure for approval at its board meeting in February.
“We had put out a discussion paper last year and were waiting for the companies Bill to be passed… The issue of independent directors’ cap will be discussed at the board meeting, when we come up with our corporate governance guidelines,” Sinha told reporters on the sidelines of an event organised by the Association of National Exchanges Members of India.
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Sebi’s guidelines will be over and above that specifically mentioned in the Companies Act. According to the companies Act, a person can be an independent director at a maximum of 10 public companies, while in its draft norms Sebi had proposed that the cap should be even lower for listed companies.
The new corporate governance models also deal with salaries of CEOs, class-actions suits, compulsory rotation of auditors, a lead independent director, succession planning and the whistle-blower policy at listed companies. Details of the proposals will be announced after the board has approved the guidelines.
Asked about Financial Technologies’ (FT’s) fit-and-proper status to run MCX-SX, Sinha said rules and procedures would be followed and Sebi would take appropriate action. He refused to give details about individual cases. Earlier this week, Sebi had summoned FT to explain its fit-and-proper status to run the stock exchange.
On the ‘activist regulator’ tag, Sinha defended Sebi’s actions, saying it was not an activist working against investors. He said the regulator would continue to take measures to build investors’ trust, which is often hit by manipulation and fraud. He added it was the absence of trust that prevented the Employees Provident Fund Organisation from parking long-term retirement funds in the equity market.
“We take each of our decisions after active consultations. But, it hurts when people call us activists to affect your business. We have to respond to the needs of the society and we have to be guided in long term growth,” Sinha said, admitting recent scams and misconduct in the market had eroded investors’ trust.
The Sebi chief also said the market regulator had taken note of the fact that over two-thirds of the initial public offerings launched in recent years were now quoting below issue price.
Meanwhile, BSE on Saturday said live trading in new interest-rate futures in long-tenure 10-year government bonds would begin on its platform on January 20. It has already received Sebi’s approval for this.
REGULATION TALK
ON FSLRC
“Financial inclusion remains a very high priority for us... FSLRC recommendations are currently being examined for implementation”
“The legislative part of FSLRC cannot be done right now; it has to wait for the next govt, but the non-legislative part can be implemented, as some of those are more about procedures and principles”
ON CORPORATE GOVERNANCE
“Hopefully, at the next meeting of Sebi’s board, we will take up the proposal for the approval. Once, it is approved, details of the proposal will be announced”
ON SEBI’s ‘ACTIVISM’
“We take each of our decisions after active consultations (with public and other stakeholders) and take measures after that... It hurts when you call us activists (working) to affect your business”
“Whether you like it or not, we have to respond to the needs of the society and we have to be guided in long-term growth”
U K Sinha
Chairman Sebi