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19 Nov 2024
The Securities & Exchange Board of India (SEBI) has revised its oversight framework for stock exchanges and other market infrastructure institutions (MIIs), detailing the structure and responsibilities of various statutory committees to enhance governance.
These guidelines follow recommendations from SEBI's Committee on Strengthening Governance of MIIs.
The new framework categorizes the statutory committees of MIIs into functional, oversight, and investment groups. Functional committees include the Member Committee, Nomination and Remuneration Committee, Oversight Committees, Standing Committee on Technology, Regulatory Oversight Committee, Risk Management Committee, and Investment Committee.
Each committee should comprise Key Management Personnel (KMP), Non-Independent Directors (NIDs), Independent External Professionals (IEPs), and Public Interest Directors (PIDs), with a PID with relevant expertise chairing each committee.
PIDs must constitute at least half of the committee members. SEBI specified that voting on any resolution requires PID participation equal to or greater than that of the other members combined.
Moreover, the responsibilities and terms of reference for each committee are clearly outlined, and these duties cannot be delegated, except for certain operational activities of the member committee.
MIIs must establish mandatory committees as required by law, with Public Interest Directors limited to serving on no more than five statutory committees. Independent External Professionals must possess integrity, a sound reputation, and no conflict of interest.
These guidelines will take effect within 30 days of the issuance of the circular.
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