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The International Advisory Board of securities market regulator SEBI has observed that there has to be transparency in Board appointments (of companies) and removal process and similar requirements need to be prescribed at both stages. This follows the boardroom battles that are being witnessed in the Tata group companies.
Set up in September 2011, SEBI’s IAB consists of its Chairman U. K. Sinha; Jane Diplock (Independent Director of Singapore Exchange Ltd ); Andrew Sheng (Chief Advisor to the China Banking Regulatory Commission); Colin Mayer (Professor, Saïd Business School) and Blair Pickerell (Chairman, Chairman, Asia of Nikko Asset Management Co).
The IAB said “It has to be realized that good corporate governance is about helping the company achieve its objectives, implement its corporate strategy, while keeping the interest of various stakeholders in mind. A matrix of expertise may be introduced to make the board diverse, balanced and in tune with the requirements for the effective functioning of the company. Audit committee should also focus on forward looking risk assessment in addition to retrospective evaluation.”
From Commission based to Fee-based Advisory
The IAB recommended that Commission-based as well as fee-based approach to investment advisory can co-exist for the time being. The transition from commission to a fee based approach has to be gradual. It urged SEBI to study of migration to fee-based advisory models under RDR (retail distribution review), FOFA (future of financial advice) and robo-advisory models.
The IAB also suggested new practices such as passporting of funds (selling Indian MF schemes abroad without the need for regulatory clearance in the host country), crowd funding in the face of fintech innovations besides pronouncing measures to make the International Financial centre (GIFT City) more competitive.
Also deliberated were issues related to cyber-security; cross-border as well as internal competitiveness among market infrastructure institutions (exchanges, depositories, clearing coporations); shrinking of public markets; emergence of dark pools, non-bank transfer of money besides growing importance of social media.
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