The Securities and Exchange Board of India today said that it will soon come out with a detailed framework on corporate governance structure that could also include the number of directorship a person can hold as an independent director.

SEBI will take up a proposal of new corporate governance model and after getting the board’s approval, it will come out with detailed guidelines, Chairman U.K. Sinha said here on the sidelines of an ANMI function.

The new corporate governance model deals with CEO salary, succession planning and whistle-blower policy in listed companies.

“...hopefully very soon in our next meeting of the SEBI board, we will be taking up the proposal (about corporate governance structure) for the approval. Once, we will get approval, details of the proposals will be announced,” Sinha said.

When asked about whether a board cap would be imposed on an independent director holding a position in a company, Sinha said: “This will be discussed in SEBI board meeting and when we come up with our corporate governance guidelines.”

“This will be one of the items to be discussed there,” he added.

Companies Act

As per the Companies Act, one person can be an independent director on a maximum of 10 public companies, while SEBI in its draft norms had proposed the cap even lower for listed companies.

Regarding SEBI’s search and seizure powers, Sinha said that the regulator has kept check and balances on this power. There is a sense of safety and security among gullible investors that the market regulator is taking some effective action.

Fit and proper status

On the issue of Financial Technologies’ fit and proper status to run MCX-SX, Sinha said “rules and procedures will be followed and we will take appropriate action’’.

Earlier this week, SEBI had summoned Financial Technologies, promoter of MCX-SX, to explain its fit and proper status to run the stock exchange.

(This article was published on January 11, 2014)
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