Why Sebi rejected NSE shareholder directors?

Mumbai: The Securities and Exchange Board of India (Sebi) has rejected the reappointment of two long-time shareholder directors on the board of the National Stock Exchange (NSE), said people privy to the development.Sebi has told NSE that it should not nominate Abhay Havaldar, former director of General Atlantic, and Prakash Parthasarathy, former chief investment officer of Premji Invest, on the exchange’s board for another term.According to NSE’s annual reports, both Havaldar and Parthasarathy have been on the board of NSE since 2012. Sebi is not comfortable with lengthy stints of directors on the boards of the so-called Market Infrastructure Institutions (MIIs) such as exchanges, depositories and clearing corporations, among others.Emails sent to Sebi and NSE remained unanswered.A senior official with one of the exchanges told ET that Sebi has tightened its scrutiny of appointments in MIIs. “Usually we send Sebi list of two or three probable names and Sebi indicates its preference. In reappointment cases also, we send our recommendations first and then the regulator decides,” the official said. “In this case, Sebi has acted in a proactive way by telling NSE not to forward the two names.”Currently, Premji Invest holds 3% stake in the exchange through PI Opportunities Fund while General Atlantic holds 3.8% via GAGIL FDI. These shareholder directors enjoyed the confidence of other institutional investors, too, which made the longer tenure possible, say market participants. NSE’s shareholding is scattered between 48 institutional investors with the majority of them holding small chunks of stake.Corporate governance experts said the proactive approach of the regulator could be because of recent controversies at the exchange. Sebi initiated several regulatory proceedings against NSE in the last few years, including a case on governance front pertaining to former CEO and CFO of the company. 78004671“Given some of the past regulatory issues that happened at NSE, Sebi may have taken a more proactive approach towards governance matters,” said Shriram Subramanian, founder of proxy advisory firm InGovern.NSE currently has nine board members including CEO Vikram Limaye. All the other board members except Havaldar and Parthasarathy have been appointed post 2017 after Limaye took charge.

from Economic Times https://bit.ly/3ifYEOs
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