- SEBI adopted a Code of Conduct with stricter conflict-of-interest norms for Board members
- Whole-time members cannot make fresh investments in individual equities during their tenure
- Existing prohibited holdings must be liquidated, frozen, or disposed of via approved methods
The Securities and Exchange Board of India (SEBI) has adopted a comprehensive Code of Conduct for its Board members, introducing stricter conflict-of-interest norms, curbs on direct stock investments by whole-time members, enhanced disclosure requirements and post-retirement restrictions aimed at strengthening governance and public trust in the market regulator.
Under the code, whole-time members, including the Chairperson, will not be permitted to make fresh investments in individual equities, instruments convertible into equity, or equity and commodity derivatives during their tenure. However, they may continue to invest through professionally managed pooled investment vehicles such as mutual funds, as well as REITs and InvITs.
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Whole-time members holding prohibited investments at the time of joining the Board will be required to either liquidate those holdings, freeze them for the duration of their tenure, or dispose of them through an approved mechanism. They will also be barred from exercising voting rights on frozen equity holdings.
The code also mandates detailed disclosures of family relationships, financial investments, liabilities, immovable properties, professional interests and rental contracts. Certain disclosures relating to immovable properties will be made public.
To address conflict-of-interest concerns, Board members will be required to recuse themselves from matters involving close family members, past professional associations, significant financial interests or relationships that could create actual or perceived bias. A digital recusal framework will record such instances, with annual summaries to be published.
The framework also allows members of the public to raise concerns regarding potential conflicts of interest, which will be examined by SEBI's Office of Ethics and Compliance.
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Additionally, whole-time members will be prohibited from accepting gifts from regulated entities or parties with whom they have official dealings. Gifts exceeding Rs 50,000 received from personal friends on social occasions must be reported.
The code further requires whole-time members to disclose future employment negotiations while in office and bars them from appearing before or against SEBI for two years after leaving the regulator.
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