SEBI introduces strict new code of conduct for its board members

SEBI has introduced a new code of conduct for its board members to boost transparency and accountability. It includes stricter norms on investments, disclosures, and conflicts of interest for whole-time members, barring them from fresh equity investments.

The Securities and Exchange Board of India (SEBI) has adopted a comprehensive code of conduct for its board members to boost transparency, accountability and public confidence in the capital markets, as per a statement by the market regulator.

Stricter Norms for Whole-Time Members

The new code, approved at SEBI's June 19 board meeting, introduces stricter norms on investments, disclosures, conflicts of interest, gifts and post-retirement employment and applies to both whole-time members (WTM), including the chairperson and part-time members (PTM), as per the release. It bars whole-time members (WTMs) from making fresh investments in equities, equity-linked instruments and equity or commodity derivatives during their tenure. Those already holding such investments must sell, freeze or dispose of them under an approved trading plan, while existing holdings cannot be used to exercise voting rights during their term. WTMs may invest through professionally managed pooled investment vehicles like mutual funds, as well as REITs and InvITs.

Disclosure Requirements

"WTM shall disclose every transaction in financial assets made by him and by his family members acquired out of the money received from the WTM or in which the WTM has an interest, during his tenure with the Board, to OEC, if the value of such transaction is more than two times of his monthly basic pay," it said.

The release further added that whole-time members are required to disclose any changes in family or relatives' details, rental agreements, or transactions involving immovable property--including purchases, sales, gifts or inheritance--to the Oversight and Ethics Committee (OEC) within one month of the end of the month in which the change occurs.

Additionally, small tokens, including bouquets, diaries, or souvenirs, are permitted; gifts exceeding Rs 50,000 from personal friends on social occasions need to be reported to OEC. "The immovable properties disclosed by WTM shall be made public by OEC with the details as specified in the Schedule," it said.

Obligations for Part-Time Members

Part-time members, however, have comparatively low disclosure obligations. The code exempts ex-officio government representatives from certain disclosure requirements if they already make similar disclosures to their parent organisations. Other part-time members must disclose their equity investments, professional interests and annual securities transactions. (ANI)

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