New governance norms likely for bourses
MUMBAI: The Securities and Exchange Board of India (Sebi) is looking to align the remuneration paid to directors and key management personnel at stock exchanges in line with provisions of the Companies Act, two people with direct knowledge of the matter said. This is part of the comprehensive review of governance and ownership norms at stock exchanges and clearing corporations which the regulator had embarked on in February.
The review will focus on increasing the governance, accountability and transparency at these market infrastructure institutions, said the two people on condition on anonymity.
On February 11, the Sebi board had decided to do this review in the wake of exchanges getting listed and observing certain governance lapses. Sebi had invited comments from the market.
“A discussion paper is being prepared,” said one of the two people cited above. “The regulator is also looking to increase transparency in the appointment of Public Interest Directors and independent directors.”
A Sebi spokesperson didn’t answer an email seeking comments sent on Wednesday.
“Sebi is also considering forming a new committee to examine the larger governance and ownership issues at the exchanges,” said the second person.
Under Stock Exchange and Clearing Corporation (SECC) norms, public interest directors are entitled to just a sitting fee, in line with Companies Act 1956. In addition, remuneration paid to key managerial personnel has to be ratified by the nomination and remuneration committee.
However, the Companies Act 2013 stipulates that the total managerial remuneration payable by a public company, to its directors, including managing director and whole-time director, and its manager cannot be more than 11% of the net profit of that company. For any one managing director; or whole-time director or manager, total remuneration shall not exceed 5% of the net profits.