Sebi lock-in for members of superceded bourses

Members of a stock exchange who were on the governing board at the time of the supercession of the bourse would not be eligible for re-election to the governing board for a period of 2 years, the Securities and Exchange Board of India (Sebi) has said in a circular to stock exchanges.

Sebi has asked the stock exchanges to provide for this disqualification in their rules, the Sebi circular issued to all the stock exchanges said.

Explaining the need for this regulation, the Sebi circular said that as a matter of better governance of the stock exchanges, "it is felt necessary that members of stock exchange who were on the governing board at the time of supercession need to be excluded from the reconstituted governing board of the stock exchange for a period of two years, as they had earlier failed to take effective action during their tenure on the governing board."

Earlier, there was no bar on governing board members offering themselves for re-election immediately after the board was reconstituted.

The Sebi circular further explained that whenever the governing board of a stock exchange fails to comply with the provisions of the bye-laws of the stock exchange and/or fails to implement the directions/guidelines issued by Sebi, it results in failure in governance.

"On such occasions, in order to ensure the safety and integrity of the stock exchange and that the transactions on the stock exchange are carried out as per the regulatory framework, Sebi has superceded the governing board of the concerned stock exchange and has appointed an administrator for specified period," the Sebi circular said.