Serious governance issues in NSE: Conscious decision not to report matter to SEBI, no action on CEO’s bizarre misconduct

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The NSE and its Board were aware of the exchange of confidential information by former MD and CEO Chitra Ramkrishna with an unknown person in its meeting held on November 29, 2016. However, the NSE and its Board had taken a conscious decision to not report the matter to SEBI and keep the matter under wraps.

Ramkrishna resigned with effect from December 2, 2016. The SEBI examination found that in spite of having knowledge of such grave irregularities and misconduct on her part, NSE and its board in the Board meeting held on December 2, 2016, allowed her to exit through resignation despite having committed such bizarre misconduct as reflected from her email correspondence with a fictitious email address, apparently belonging to Anand Subramanian, without taking any action in this regard.

The NSE and its board also appreciated Ramkrishna on record while accepting her resignation with immediate effect.

The SEBI examination found that in terms of Clause 12 of SEBI Circular dated December 13, 2012, public interest directors in the Board of NSE are required to identify important issues that may have significant impact on the functioning of stock exchange and that may not be in the interest of market and report to SEBI.

However, the SEBI was not informed about the aforesaid decisions taken by the board of NSE in its meetings held on October 21, 2016 and November 29, 2016 reflecting the serious governance issues in NSE.

The SEBI examination also found that in terms of Regulation 27(4) of SECC Regulations, 2012, the terms and conditions of the compensation of the managing director shall not be changed without prior approval of SEBI. Ravi Narayan in spite of having knowledge of such grave irregularities and misconduct on the part of Ramkrishna in the earlier meeting of Board/NRC held on October 21, 2016 and November 29, 2016, allowed excess leave encashment of Rs 1.54 crore to Ramakrishna in the NRC/Board meeting held on December 19, 2016 over the existing policy of the NSE citing her sterling contribution to the growth of organisation without approval of the SEBI in violation of Regulation 27(4) of SECC Regulations, 2012.

(Sanjeev Sharma can be reached at Sanjeev.s@ians.in)

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