𝐒𝐄𝐁𝐈 𝐂𝐨𝐧𝐬𝐮𝐥𝐭𝐚𝐭𝐢𝐨𝐧 𝐩𝐚𝐩𝐞𝐫 𝐨𝐧 𝐩𝐫𝐨𝐯𝐢𝐬𝐢𝐨𝐧𝐬 𝐩𝐞𝐫𝐭𝐚𝐢𝐧𝐢𝐧𝐠 𝐭𝐨 𝐚𝐩𝐩𝐨𝐢𝐧𝐭𝐦𝐞𝐧𝐭 𝐨𝐟 𝐏𝐮𝐛𝐥𝐢𝐜 𝐈𝐧𝐭𝐞𝐫𝐞𝐬𝐭 𝐃𝐢𝐫𝐞𝐜𝐭𝐨𝐫𝐬

𝐁𝐚𝐜𝐤𝐠𝐫𝐨𝐮𝐧𝐝: Stock exchanges, Clearing Corporations and Depositories are all Market Infrastructure Institutions (collectively herein referred to as “MIIs”) and constitute a key part of the nation’s vital economic infrastructure. MIIs are unique institutions providing vital market infrastructure of trading, settlement and record keeping. They help in enforcing market regulations and supporting regulatory initiatives aimed at enhancing investor protection, market transparency, fair access and treatment to all stakeholders, and managing risk, while pursuing commercial objectives.

The governing board of MIIs play a critical role towards ensuring that the objective of Public Interest is given primacy in the operation of an MII. The governing board of MIIs consists of Managing Director, Non-Independent Directors (NIDs) and Public Interest Directors (PIDs).

Regulation 2(1)(o) of the Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2018 (hereinafter referred to as “SECC Regulations, 2018”) and Regulation 2(1)(m) of the SEBI (Depositories and Participants) Regulations, 2018 (hereinafter referred to as “D&P Regulations, 2018”) inter-alia define PID as an independent director representing the interests of investors in securities market.

𝐎𝐛𝐣𝐞𝐜𝐭𝐢𝐯𝐞: This paper seeks public comments on various proposals connected with:
1.      The process adopted by SEBI for appointment of PIDs on MIIs, and for improving the ease of doing business for PIDs. The suggestion relating to the appointment process aims to achieve better shareholder participation in the appointment process of PIDs.
2.      For improving ease of doing business for PIDs, the proposals include:
·        easing documentation requirement when being considered for PID appointment,
·        allowing payment of fixed stipend to PIDs in addition to sitting fees, and
·        reducing cooling off period for appointment of PIDs.

The Consultation Paper is open for feedback until Sept 12, 2024. Readers are encouraged to provide their comments and suggestions to Regstreet Law Advisors at info@regstreetlaw.com. A copy of the order is enclosed.