The Securities and Exchange Board of India (Sebi) has proposed easing rules governing who can serve on the boards of stock exchanges and other key market institutions, saying the current restrictions can make it difficult to find suitable candidates, reported Reuters.
Under the existing framework, people associated with stock brokers and other market intermediaries are generally not allowed to serve on the boards of stock exchanges, clearing corporations and depositories.
Sebi said the restrictions can sometimes keep out otherwise suitable candidates, particularly in large business groups where different subsidiaries operate independently.
The regulator has proposed allowing directors of widely held companies to serve on the boards of market infrastructure institutions even if another company within the same group is a stock broker, clearing member or depository participant.
Sebi has proposed that a company would qualify as widely held if no private shareholder, either alone or together with related parties, owns or controls 10% or more of the company.
Public-sector shareholders would not be counted while applying this 10% threshold.
According to Sebi, the proposed change could widen the pool of candidates and help market institutions bring more experienced professionals onto their boards.
Sebi has also proposed clearer eligibility and experience requirements for senior officials handling important functions such as technology, cybersecurity, compliance and risk management.
The regulator has proposed that vacancies in these key positions should be filled within three months.
It has also sought views on whether market institutions should be allowed to appoint deputies for these roles. The move is aimed at ensuring continuity if a senior official leaves the position or is temporarily unavailable.
Sebi has invited comments from stakeholders on the proposed changes. The deadline for submitting feedback is September 30.
The proposals are aimed at making the governance framework for market institutions more flexible while ensuring that experienced professionals continue to be available for critical board and senior management positions.