Sebi proposes shareholders of market infra institutions have larger say in PID appointments

Sebi has also suggested that the remuneration given to PIDs be raised from a maximum of Rs 12 lakh to Rs 30 lakh per annum, in a consultation paper issued on August 27.

The market regulator has proposed a new system for appointing public interest directors (PIDs) for market insfrastructure institutions (MIIs), and for compensating PIDs better.

These directors are appointed to ensure that, in the pursuance of business objectives, MIIs do not lose sight of the responsibilities vested upon them as public utility infrastructure institutions. As of now, their appointment does not require the shareholders' approval.

The regulator has suggested a mechanism through which shareholders of the MII will have a larger participation in the PIDs' appointment. Sebi has also suggested that the remuneration given to PIDs be raised from a maximum of Rs 12 lakh to Rs 30 lakh per annum, in a consultation paper issued on August 27.

According to the paper, the Securities and Exchange Board of India (Sebi) has received feedback that, under the current regulatory regime, shareholders do not have material oversight powers with respect to the functioning of the Board of MIIs. "In case of decisions of governing board impacting shareholder wealth, shareholders, in hindsight, may feel aggrieved about not being included in the PID appointment process," stated the paper.

(This is a developing story.)