SEBI Revises Oversight Framework For Market Infrastructure Institutions

The Securities and Exchange Board of India has updated its regulatory framework for stock exchanges and other market infrastructure institutions. The revision outlines the composition and duties of different statutory committees to improve governance.

The recommendations on the governance of MIIs are based on SEBI's Committee guidelines, as per a circular released by the market regulator. The statutory committees of MIIs can be categorised into functional, oversight, and investment groups.

The Member Committee, Nomination and Remuneration Committee, Oversight Committees, Technology Regulatory Oversight Committee, Risk Management Committee, and Investment Committee are all functional committees.

On the composition of panels, SEBI said such committees should include Key Management Personnel (KMP), Non-Independent Directors (NIDs), Independent External Professionals (IEPs), and Public Interest Directors (PIDs).

Every committee needs to be led by a person in-charge (PID) who possesses the necessary expertise. Additionally, PIDs should make up at least 50% of the committee members. SEBI has stipulated that for any resolution to be voted on, the participation of PIDs must be equal to or exceed that of all other members combined.

"The voting on a resolution in the meetings of the statutory committees at MIIs shall be valid only when the number of PIDs that have cast their vote on such resolution is not less than the total number of other members put together, who have cast their vote on such resolution," SEBI said.

Additionally, the regulator has put in place specific responsibilities and terms of reference for each committee.

Further, functions or terms of reference of statutory committees cannot be delegated, except certain operational activities of the member committee.

On compliance requirements, SEBI said that MIIs must have mandatory committees as required by relevant laws.

Public Interest Directors cannot serve on more than five statutory committees. Independent External Professionals should have integrity, a sound reputation, and no conflict of interest.

The new guidelines will come into force within 30 days of the issuance of the circular.

(With inputs from PTI)