Legally Bharat

The Securities and Exchange Board of India (Sebi) is set to hold a crucial board meeting on Monday, its first gathering following the allegations of conflict of interest against chairperson Madhabi Puri Buch by US-based Hindenburg Research and India’s Congress party.

The board is likely to take cognisance of the conflict of interest accusations and the issues arising from the withdrawn press release on employee matters. Although these topics are not on the official agenda, they may be informally discussed, according to people with knowledge of the matter.

“Between the last board meeting and Monday’s meeting, any significant event concerning the institution, its board members, including the chairperson, has to be taken note of by the board,” said one of them. In the period between the June 27 and September 30 board meetings, Sebi employees complained to the finance ministry about what they called a “toxic work culture”. The institution initially blamed external elements for the employees’ agitation, but later withdrew the statement after protests by staff.

Key Proposals
During the period, Hindenburg alleged that Buch and her husband had investments in offshore funds controlled by Vinod Adani, the brother of Adani Group chairman Gautam Adani, which were allegedly used for manipulating funds and inflating stock prices of the group’s listed entities in India.

It also alleged that Sebi had amended rules related to real estate investment trusts (REITs) in a manner that benefited Blackstone, where Buch’s husband is a senior adviser. The Congress party accused Buch of trading in listed securities, selling employee stock options from her previous employer ICICI Bank during her term at Sebi, and making money through her advisory firm that offered consultancy services to listed companies, breaching the regulator’s conflict of interest policy.

The Buchs and Sebi issued statements rebutting these allegations, but the board is yet to give its opinion. The board consists of eight members, including Buch, four whole-time members of Sebi, and three part-time nominees from the finance ministry, corporate affairs ministry, and the Reserve Bank of India. This will be the first board meeting for new corporate affairs secretary Deepti Gaur Mukerjee and the last one for deputy RBI governor M Rajeshwar Rao, who retires next month.

External members may insist on discussing the allegations against the chairperson, said the people cited above. While it’s unclear whether such deliberations would be formally minuted, the outcome of the board meet could determine what lies ahead for the Sebi chief, they said. The board is also likely to discuss several proposals, including easing norms related to rights issuances, introducing a new asset class, and implementing mutual fund-lite regulations for passive funds. Sebi is also considering a plan to allow promoters to renounce their rights entitlement in favour of a select investor for rights issues. For the new asset class, which is meant to plug the gap between mutual funds and portfolio management services (PMS), Sebi plans to allow investments between `10 lakh and `50 lakh. Sebi is also planning to tighten rules for futures and options (F&O) trading, but this proposal may not be taken up to the board for approval as it doesn’t require changes to Stock Exchanges and Clearing Corporation (SECC) regulations and the Securities Contract Regulation Act (SCRA), said the people cited above. An email sent to Sebi on its Monday board meeting didn’t elicit any response.

  • Published On Sep 30, 2024 at 02:04 PM IST

Join the community of 2M+ industry professionals

Subscribe to our newsletter to get latest insights & analysis.

Download ETLegalWorld App

  • Get Realtime updates
  • Save your favourite articles


Scan to download App


Source link

Leave a Reply

Your email address will not be published. Required fields are marked *