SEBI partially approves Kotak panel’s recommendations

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Mumbai, March 28 (IANS) Securities market regulator Sebi on Wednesday approved most of the measures suggested by the Kotak Committee for enhancing corporate governance, along with steps to strengthen algorithmic trading and encourage participation through the MF route.

According to Sebi Chairman Ajay Tyagi, the regulator’s board has approved many recommendations of the Kotak panel.

The recommendations accepted without modification included “reduction in maximum number of listed entity directorships from ten to eight, expanding the eligibility criteria for independent directors and mandatory disclosure of consolidated quarterly results with effect from 2019-20”, he said.

“Recommendations which have been referred to other agencies are strenghtening the role of ICAI, internal financial controls, adoption of index and governance aspects of public sector undertaking,” Tyagi said after the SEBI’s Board meeting here.

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Besides, the recommendations accepted with modifications include appointment of “at least one woman independent director in the top listed entities with market capitalisation in top 500 companies by April 1, 2019, then (in) top 1,000 (companies) by April 2020, separation of CEO, MD and Chairperson in the top 500 conpanies.”

The regulator also made webcast of annual general meetings compulsory for the top 100 entities by market capitalisation with effect from FY20, the chairperson said.

The recommendations not accepted included “sharing of information with promoters, other significant shareholders, increase in minimum number of independent directors on board, minimum compensation to independent directors.”

Sebi had set up the Kotak Committee in June 2017 to make recommendations for improving the standards of corporate governance of listed entities in India.

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Among measures for strengthening algorithmic trading framework, the board approved introduction of shared co-location services by stock exchanges, to reduce the cost for trading members wishing to operate from the co-location facility.

Stock exchanges would have to “provide tick-by-tick data feed (TBT Feed) to all the trading members, free of charge, subject to trading members creating the necessary infrastructure for receiving and processing it,” the regulator said in a statement.

In addition, the regulator approved measures to facilitate greater alignment of cash and derivative markets.

Further, Sebi approved the proposal to amend the provision permitting charging of additional expenses of up to 0.20 per cent of the daily net assets of MF schemes in lieu of the exit load credited to the scheme.

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“Based on data and the recommendations of Mutual Fund Advisory Committee, the board approved the proposal to reduce the maximum additional expense permitted to be charged to a mutual fund scheme from 20 basis points to 5 basis points,” the statement added.

The regulator also reduced the requirement of minimum corpus of an angel fund from Rs 10 crore to Rs 5 crore and increased the maximum period for “accepting funds from angel investors from three years to five years”.



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