SEBI Tightens Governance for Stock Exchanges with New Oversight Framework

Markets regulator SEBI has revised its oversight framework for stock exchanges and market infrastructure institutions to enhance governance. New guidelines, based on committee recommendations, define statutory committee structures and responsibilities. Public Interest Directors must form at least half of committee members, and their votes must equal or outnumber other votes.

The Securities and Exchange Board of India (SEBI) announced on Tuesday a revised oversight framework aimed at improving governance in stock exchanges and market infrastructure institutions (MIIs). This update, issued through a circular, outlines the structures and responsibilities of various statutory committees based on recommendations by SEBI's Committee on Strengthening Governance of MIIs.

SEBI has categorized these statutory committees into functional, oversight, and investment types. Functional committees include the Member Committee, Nomination and Remuneration Committee, Standing Committee on Technology Regulatory Oversight Committee, and Risk Management Committee, among others.

Each committee must now include Key Management Personnel, Non-Independent Directors, Independent External Professionals, and Public Interest Directors (PIDs). A PID, who should possess relevant expertise, is mandated to chair each committee, and PIDs must form at least half of the members. SEBI stipulated that any resolution's validity relies on PID participation being equal to or greater than that of other members.

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