Managing directors at MIIs to have two terms of five years each: Sebi

Managing directors (MDs) at stock exchanges, depositories and clearing corporations can have a maximum of two terms of five years each, according to markets regulator Sebi.

The board of Sebi today 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 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 may serve as a PID (public interest director) across MIIs, for a maximum of three terms of three years each, or up to seventy five years of age, whichever is earlier, with not more than two terms in one MII," Sebi said in a release.

"A person may serve as managing director of a MII, for a maximum of two terms of up to 5 years each or up to 65 years of age, whichever is earlier. The said requirement would also be applicable to existing MDs of MIIs," 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 be permitted" to hold up to 15 per cent shareholding in case of depository and clearing corporation, which is the case with the stock exchanges.

"Concept of sponsor has been removed in case of depository, with existing sponsor entities being allowed up to 5 years to reduce their respective shareholding. They can hold up to 15 per cent," Sebi said.

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.