The D R Dhanuka panel has suggested a recast of the Sebi board. According to the report, the Securities Act specifies a board structure wherein, besides the chairman and the nominees of ministries of law and finance, and RBI, there are three independent professionals nominated by the government.
Under the existing provision of the Sebi Act, there are two professionals allowed to be appointed. This will take the total number of members on the board from six to seven.
Currently, there are only five members on the Sebi board. There is only one 'outside' professional, J R Varma. There has been no appointment made by the government as yet for the second independent professional. According to sources, the committee debated the issue of broad-basing the board at length. It also received a response from the industry. A suggestion was made that there should be adequate representation for the professionals in the capital market on the Sebi board.
"The committee has retained the existing provisions of appointing two outside representatives. It has added one extra professional to the board to ensure balance between representatives from the government and government institutions, and independent professionals. The new Act will only give an enabling provision for the government to do so," a committee member told Business Standard.
"There was a representation made by various experts in the capital market before the committee that there is a need for representation for those who are into the business of finance and securities. However, for example, if a broker is asked to be on the Sebi board he has to give up his business to avoid any conflict of interests. Such directions can be issued by the government," the member added.
The committee also looked into the process of appointments of SEC Commissioners made in the US. "The five SEC commissioners are appointed by the president. They have to give up their business and promise the Congress of doing so. The government has so far not made any attempts to invite anybody, directly involved in activities regulated by the Board, to be represented on the board," the committee member said. The committee member also clarified that all appointments have to be made by the government. Sebi is under the administrative control of the ministry of finance. The existing Sebi Act, 1992 gives clear details of who should be appointed.
