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New governance norms likely for bourses

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The Securities and Exchange Board of India (Sebi) is looking to align the remuneration paid to directors and key management personnel at stock exchanges in line with provisions of the Companies Act, said two people with direct knowledge of the matter. This is part of the comprehensive review of governance and ownership norms at stock exchanges and clearing corporations which the regulator had embarked on in February.
The review will focus on increasing the governance, accountability and transparency at these market infrastructure institutions, said these people on condition on anonymity. On February 11, the Sebi board had decided to do this review in the wakeof exchanges getting listed and observing certain governance lapses. Sebi had invited comments from the market to finalise a list of proposed norms.
“A discussion paper is being prepared,” said the first person cited earlier. “The regulator is also looking to increase transparency in the appointment of Public Interest Directors (PIDs) and independent directors.
A Sebi spokesperson didn’t answer an email seeking comments sent on Wednesday.
“Sebi is also considering forming a new committee to examine the larger governance and ownership issues at the exchanges,” said the second person.
On June 2, the regulator had separately formed a panel headed by Uday Kotak, executive vicechairman and managing director of Kotak Mahindra Bank Ltd, to review norms for governance in listed firm.
Under the current Stock Exchange and Clearing Corporation (SECC) norms, which were finalised in 2012, public interest directors are entitled to just a sitting fee in-line with Companies Act 1956. 
Additionally, remuneration paid to key managerial personnel has to be ratified by the nomination and remuneration panel, which is made of majority public interest directors.
However, the Companies Act 2013 stipulates that the total managerial remuneration payable by a public company, to its directors, including managing director and whole-time director, and its manager cannot be more than 11% of the net profits of that company. For any one managing director; or whole-time director or manager, total remuneration shall not exceed 5% of the net profits.
The Hindustan Times, New Delhi, 24th July 2017

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