Mumbai: Managing directors at stock exchanges, depositories and clearing corporations can have a maximum of two terms of five years each, according to Sebi. The move comes after the board of Sebi in June approved changes to regulations governing Market Infrastructure Institutions (MIIs) wherein the first term in stock exchanges, depositories and clearing corporations may be extendable by another term, subject to satisfactory performance review.
Besides, a cooling-off period of one year should be applicable prior to nomination as a public interest director (PID) in another MII, while that of three years for a director to become a shareholder director in the same institution or a director in its subsidiary. “A person shall be nominated as a public interest director for a maximum of three terms across a depository/a recognised stock exchange / a recognised clearing corporation, subject to a maximum age limit of 75 years,” the Sebi said in two separate notifications dated October 3.
Further, Sebi said, “appointment of MDs shall be for a term not exceeding five years. Provided that post the completion of first term as MD, the depository shall conduct the appointment process afresh”. A person may be appointed as MD by the depository or a recognised stock exchange or recognised clearing corporation “for a maximum of two terms not exceeding five years each subject to a maximum age limit of 65 years”, it added.The regulator has also “harmonised” the shareholding limits, which can be held by both eligible domestic and foreign entities in a MII, in order to bring parity across them.
The eligible domestic and foreign entities may acquire or hold up to 15 per cent shareholding in case of depository and clearing corporation, which is the case with the stock exchanges. According to the regulator, the number of PIDs, on the governing board and the committees of the MIIs, should be at least equal to the number of shareholder directors (including the managing director) and in case of an equality of votes, the chairperson of the board or committee (who is a PID), should have a second or casting vote.
The regulator has also modified the definition and norms relating to disclosure of the compensation of the key management personnel. The definition has been modified to include, any person who directly reports to the CEO or director of the governing board of the MII or any person up to two levels below MD or CEO. The regulator directed MIIs to disclose the ratio of compensation paid to them vis-a-vis median of compensation paid to all their employees.
