SEBI Board Meeting: Easier Appointment Norms For Public Interest Director Likely

The Securities and Exchange Board of India is likely to approve fixed annual remuneration for public interest directors on market infrastructure institutions such as exchanges and depositories at its board meeting on June 18, according to people familiar with the matter.

The proposal includes a fixed annual salary of up to Rs 30 lakh for each PID, in addition to the existing sitting fee of Rs 1 lakh per board or committee meeting attended, the people said. PIDs are only paid sitting fees and are not entitled to a fixed salary at present, they said.

The markets regulator is also proposing several steps to make it easier for professionals to take on PID roles. These include reducing the amount of documentation needed during the appointment process, allowing fixed stipends in addition to sitting fees, and shortening the "cooling-off" period required before someone can be appointed as a PID.

The aim of these proposed changes is to strike a balance between maintaining regulatory oversight and giving shareholders more say in how MIIs are governed, while also encouraging a broader pool of qualified candidates to serve as Public Interest Directors.

Currently, the appointment of PIDs is handled entirely by MIIs and SEBI.

The process begins with the Nomination and Remuneration Committee of an MII selecting and evaluating at least two candidates, whose names are then passed to the board of the MII and eventually forwarded to SEBI for final approval.

Shareholders of the MIIs have no role or voting rights in this process, even though the Companies Act mandates shareholder approval for independent directors in companies.