SEBI has come out with proposals connected with the process adopted by the markets regulator for the appointment of public interest directors (PIDs) on stock exchanges, clearing corporations and depositories, in a move aimed at improving shareholders' participation in the process.
For improving ease of doing business for PIDs, the proposals include easing documentation requirements when being considered for PID appointment, allowing payment of fixed stipend to them in addition to sitting fees, and reducing cooling off period for their appointment.
The role of PIDs is vital in enhancing corporate integrity and governance standards in any market infrastructure institutions (MIIs). PIDs, especially, play a vital role in balancing the interests of MII's management, its shareholders and more importantly ensuring the safety, efficiency and integrity for the market participants using the infrastructure of these MIIs.
An alternate process for appointment of PIDs has been suggested whereby after receiving names from MIIs, SEBI would examine the application and would give NOC to MIIs to take it to their shareholders for approval. After receiving NOC from SEBI, shareholders' approval will be taken by the MII. Once shareholders approve a candidate, the application will comeback to SEBI for final approval.
Under the current regulatory regime, shareholders do not have material oversight powers with respect to the functioning of the board of MIIs.
On remuneration, Sebi proposed that each PID of MIIs in addition to sitting fees and expenses relating to attending meeting of the board and its committees should be paid fixed remuneration of up to Rs. 30 lakh per annum.
Comments may be submitted by 12th September, 2024.
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