Sebi tightens grip on board composition at market infra institutions

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The regulator currently has a rigorous framework in area dictating the appointments and tenures of board users at stock exchanges, clearing companies and depositories –termed MIIs in market parlance. Nevertheless, it seems the regulator opposed reappointment of sure ‘shareholder directors’ owing to fears in excess of their prolonged association.

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A further shareholder director nominated by Lifestyle Coverage Corporation (LIC), Sunita Sharma, even so, has obtained the regulator’s nod for re-appointment. She has been related with NSE since Oct 2016.

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Other MIIs, like Countrywide Securities Depository (NSDL) and the Central Depository Solutions India (CDSL) have obtained new shareholder directors this yr. The trend suggests regulator has been in favour of shorter tenures for unbiased directors that serve on the boards of MIIs.

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There are two kinds of unbiased directors that serve on the board of MIIs—public interest directors (PIDs) and shareholder directors.

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PIDs are appointed for a interval of three decades and can have a greatest of two tenures with a solitary MII and just one more tenure with yet another MII with a just one-yr cooling off interval.

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Meanwhile, appointment of shareholder directors is ruled by the Organizations Act, which allows tenure of up to five decades and reappointment by way of distinctive resolution.

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