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Securities Exchange Board of India (Sebi) chairman U K Sinha on Wednesday emphasised the need to encourage young entrepreneurs to reach the next level of growth. He added researchers and institutions like IIMs can play a significant role towards achieving it.
“There is a great need to take young entrepreneurs in India to the next level of growth and encourage them to look at the public markets when raising funds.That’s where researchers and schools like the IIMs can play a significant role,” Sinha said, in his inaugural address at the fourth India Finance Conference at IIM, Bangalore, here on Wednesday.
The India Finance Conference is a conference where the three IIMs — Bangalore, Ahmedabad and Calcutta — join to promote research in various aspects of finance with respect to India and the sub-continent.
He said one of the challenges he found during interactions with some young entrepreneurs in Coimbatore’s SME clusters was of their misconceptions about compliance costs if they chose to take the public market funding route.
Sinha said: “Sebi has a strong research component in the National Institute of Securities Markets (NISM) that creates professionals, so it makes sense to link the work of NISM with the work of the IIMs.”
On Sebi’s future plans he said the regulator would work on the recommendations of the Financial Sector Law Reforms Committee (FSLRC) on inter-regulatory co-ordination.
In his address, while offering a perspective on the Indian securities market, Sinha explained the three-fold mandate of the Sebi — protect the interests of investors, develop the market and regulate it. He added the responsibilities were “complementary, not contradictory”.
Sebi, he said, remains a unique organisation, because it has responsibilities and functions that are legislative, executive and quasi-judicial in nature. Referring to the July 2011 amendment that extended additional responsibilities to Sebi, he said the regulator had been given powers to search and seize, enforce recovery of penalties and foil unscrupulous attempts by individuals to raise money in totally unauthorised ways. Though Sebi was set up by an act of Parliament, in no way are we dependent on the government of the day, he added.
On the market measures taken by Sebi, he said the regulator was working with the SIT on black money; and on the REITS that would help promote the real estate market and provide an avenue for small investors to participate in the market and provide a platform for SMEs to access capital.
On corporate governance, Sinha said SEBI’s work on protecting the interests of shareholders was paying off. He cited the October 2014 World Bank report on ‘Ease of Doing Business in India’ that ranked India seventh on the scale of shareholder protection. (India was 49 in 2012 and 34 in 2013).
Corporate governance came in for special attention in Sinha’s talk as he detailed SEBI’s directives to listed companies on increasing their diversity on their boards and having independent directors, with ceilings on their terms of office; in ensuring the Top 100 companies bring out a business responsibility report in their annual reports; and on taking a serious note of abusive related third-party transactions.
“To be approved, every related third party transaction must be cleared by an audit committee, led by an independent director, and by 75 per cent of unrelated shareholders,” he said, adding that shareholders in India, in recent years, have been defeating “unfair” resolutions.
SEBI CHIEF SPEAKS:
On challenges
Misconceptions of young entrepreneurs about compliance costs if they chose to take the public market funding route
On Sebi’s future plans
It would work on the recommendations of the Financial Sector Law Reforms Committee on inter-regulatory co-ordination
On market measures of Sebi
The regulator was working with SIT on black money and on Reits that would help promote the real estate market and provide an avenue for small investors to participate in the market and provide a platform for SMEs to access capital
