The Hindu Business Line : SEBI eyes `primary regulator' role

"As a primary regulator, SEBI then would have a direct jurisdiction to regulate those activities of listed companies that generally affect shareholders' rights such as financial reporting, continuous disclosures, corporate governance etc.", Ms Neelam Bhardwaj, Head, Listing, SEBI, said at a PHDCCI seminar on `Strategies for effective listing compliance' here on Friday.

The SEBI official held that in such a situation the core company matters like company formation, external administration, etc., would remain with the Ministry of Company Affairs (MCA) - a view voiced by the Joint Parliamentary Committee (JPC).

Regulators such as the MCA and the Institute of Chartered Accountants of India (ICAI) have jurisdiction over various facet of the functioning of a corporate enterprise, including financial reporting, corporate governance etc.

The norms spelt out by these regulators have sometimes come in conflict with those prescribed by SEBI, thereby placing the listed companies in a difficult situation. A case in point is the accounting treatment and disclosure requirements of employee stock options (ESOPs).

In her address, Ms Bhardwaj highlighted that SEBI's current lack of jurisdiction in important areas of listed company regulation such as financial reporting and corporate governance has been prompting it to use the listing agreement to impose requirements that are more stringent than the one provided in the Companies Act.

"SEBI is of the view that listed companies need to be treated at a level far above than unlisted companies in view of the involvement of public interest", the senior SEBI official said.

She also suggested a more radical approach of combining securities regulations and company administration in one agency that is given responsibility and resources to carry out both the functions. "This will make life simpler for everybody... " she said.

At the same time, Ms Bhardwaj also held that the SEBI is constantly endeavouring in consultation with the MCA to harmonise various provisions, without compromising on the quality of compliance requirements.

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