2 more public interest directors quit VSE board

Vadodara Stock Exchange (VSE) may see stricter regulatory action in the days to come. A day after the exchange's chairman Mukund Shah was removed by the Securities and Exchange Board of India (Sebi), two more public interest directors (PIDs) have quit.

Insiders say as the probe into a complaint by VSE Managing Director G Someswara Rao regarding forced resignations in the exchange's board progresses, more Sebi action would follow.

"Soon after chairman Mukund Shah was removed, two more public interest directors - Nilkanth Jani and Dhiren Mehta - have resigned, fearing Sebi action. We may see some more action against the shareholder directors, too," said a VSE source.

Trading members, who own 47 per cent stake in the exchange, allege Jani and Mehta had violated Sebi norms on attending a certain number of board meetings in a regional stock exchange. "They have been absent at more than three straight board meetings," said Vishnubhai Patel, president of VSE Brokers' Forum. "We want this board to be superseded, since it is mired in unethical practices and it isn't following Sebi regulations."

Now, the board of directors has two PIDs - chartered accountant Rajesh Nagra and advocate Ajitsinh Sokanki. The number of shareholder directors is four. "It is a Sebi guideline that on the board of a regional stock exchange, there should be an equal number of PIDs and shareholder directors. But here, the number of shareholder directors is more," said a trading member.

Meanwhile, Sebi is continuing its probe into the alleged forced resignation of Rao. The regulator has also put the resolution of the board passing the resignation of Rao in abeyance and reinstated him as managing director. "However, I am not yet given full charge of the exchange. Status quo prevails," Rao said.

On October 7, the shareholder directors of the exchange had allegedly forced Rao to resign and replaced him with acting managing director M G Shaikh. The next day, Rao had filed complaint with the regulator. A two-member Sebi team visited the exchange on October 9 and initiated a probe into the matter, sacking the chairman Mukund Shah.