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New corporate code in the works

Sinha: Action time

New Delhi, Jan. 11: Sebi today said it would soon come out with a detailed framework on corporate governance structure that could also include the number of independent director’s post a person can hold.

The Securities and Exchange Board of India (Sebi) at its next board meeting will take up a proposal of new corporate governance norms for approval. After the board’s nod, it will come out with the detailed guidelines, chairman U.K. Sinha said on the sidelines of an event here.

The new corporate governance norms deal with CEO salaries, succession planning and whistle-blower policy at listed companies.

Sebi, which has put out a discussion paper in January 2013, have been waiting for the companies bill to get passed. The bill was finally passed late last year and the new act is now being implemented.

On whether a board cap will be imposed on an independent director holding a position in a company, Sinha said, “This will be discussed in Sebi’s board meeting and when we come up with our corporate governance guidelines.”

According to 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.

On Sebi’s search and seizure powers, Sinha said the regulator had kept checks and balances on this power. There is a sense of safety and security among gullible investors that Sebi is taking some effective action.

On Financial Technologies’ 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, the promoter of MCX-SX, to explain its eligibility to run the stock exchange.

Financial reforms

A major overhaul of the financial sector rules, as suggested by a government panel, may have to wait for the next government but non-legislative recommendations in this regard can be implemented even now, the Sebi chairman said today.

In its report, the Financial Sector Legislative Reforms Commission (FSLRC) has recommended sweeping changes in the way the financial sector is regulated in the country, including banking and insurance to capital markets.

While not much progress has been made towards implementing the recommendations made in this report, which was submitted to the government in March last year, the finance ministry has now called for early implementation of the non- legislative proposals.

“The legislative part of FSLRC cannot be done right now (and) it has to wait for the next government, but the non-legislative part can be implemented as some of them are more about procedures and principles,” Sinha said.

 
 
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