The high-level committee (HLC), formed by the Securities and Exchange Board of India (SEBI) to decide on the framework of conflict-of-interest guidelines for board members, has sought recommendations from employees for changes in the code.
In the first meeting of the panel held last week, it was decided that the two crucial features of the code will be the definition of family and frequency of disclosures. “These two factors are important because there are strong guidelines for market participants,” said a source close to the development.
Former chief vigilance commissioner Pratyush Sinha, who heads the six-member committee, discussed deficiencies of the current code as things have changed a lot, both in terms of technology and social media, since the last review. The committee also proposes to look at regulations in other developed markets.
Currently, the 2008 conflict-of-interest code defines family as spouse and dependent children under the age of 18. According to this code, disclosures are kept confidential, except for certain circumstances.
The committee’s mandate is to review the provisions related to conflict of interest, disclosures pertaining to property, investments, liabilities and other related matters in respect of members and officials of the board. In addition, it will recommend a mechanism for the public to raise concerns pertaining to conflict of interest and disclosures, including a process to examine complaints.
The committee is expected to submit its recommendations within three months from the date of formation (April 9).
SEBI approved formation of a high-level committee in the first board meeting under chairperson Tuhin Kanta Pandey, after his predecessor Madhabi Puri Buch had faced allegations of conflict of interest in the regulators’ investigation into Hindenburg’s accusations on the Adani Group.
Pandey had told FE in an interview last month that the framework has to be clear on the list of dos and don’ts as there are grey areas, “which is why we want the high-level committee to apply its mind”. “A framework for monitoring is required. If someone has recused, there should be some ready-made database. There has to be a definition of what is a conflict-of-interest and vice versa,” he had said.