NSE's 2016 DRHP filing made only a brief reference to Anand Subramanian

The DRHP, which must enlist all key risk factors, came in within two months of Anand Subramanian quitting as Group Operating Officer and Advisor to MD and within weeks of Chitra Ramkrishna's leaving

The country’s largest bourse NSE had filed its draft red herring prospectus (DRHP) with market regulator Securities and Exchange Board of India (Sebi) in December 2016.

The filing for its Rs 10,000-crore IPO came in less than two months of Anand Subramanian stepping down as Group Operating Officer and Advisor to MD and within weeks of then MD & CEO Chitra Ramkrishna’s resignation. She quit in the wake of the colocation scandal and due to alleged irregularities over appointment and elevation of Subramanian.

The DRHP, which is supposed to enlist all the key risk factors, has only a brief mention about Subramanian.

“Sebi, by its letter dated September 15, 2016, advised us to place the complaint letters before our board and to decide whether there has been any violation of code of conduct or principle of avoidance of conflict of interest while appointing Anand Subramanian as the Group Operating Officer and Advisor to the Managing Director and submit a report to Sebi. Anand Subramanian has foreclosed his consultancy assignment with effect from October 21, 2016 and Sebi has been informed of the same through our email dated December 21, 2016,” says the offer document.

Five years after the exchange’s IPO filing, Subramanian’s appointment at NSE has snowballed into a big controversy.

The Sebi order issued last week says it received complaints dated December 15, 2015, May 25, 2016 and November 11, 2016 against Ramkrishna alleging governance issues in appointment of Subramanian.

The regulator then sent emails to NSE on the following dates in the year 2016: February 19, May 24, May 27, June 20 and June 30, seeking more clarity over Subramanian's apppointment.

NSE’s then Chief Regulatory Officer sent emails dated March 14, 2016 and June 30, 2016 to Sebi stating that there was no violation in the appointment.

The DRHP is silent on the frequent reminders sent by Sebi to NSE seeking a report on Subramanian.

Last week’s order says, “Sebi issued repetitive reminders vide emails/letters dated October 24, 2016, November 09, 2016, December 19, 2016 and May 18, 2017, as a result, NSE submitted a report dated November 22, 2017 of its NRC vide its email dated November 29, 2017 and subsequently, vide its letter dated September 14, 2018.”

The DRHP also talks about Ramkrishna’s resignation and lists the prospect of not finding a suitable replacement as a risk factor.

NSE’s first attempt to go public didn’t materialise as the exchange got embroiled in a legal tangle with Sebi over the colocation issue. Since then, NSE's board and management has undergone a total revamp.

In April 2019, Sebi issued multiple orders against NSE and some of its current and former employees for lapses at its co-lo facility that allowed preferential access to certain brokers. The exchange directed the bourse to disgorge Rs 625 crore, along with an interest of 12 per cent per annum from April 1, 2014.

NSE challenged Sebi orders before the Securities and Appellate Tribunal (SAT), where the matter is currently pending.

Last year, NSE had requested Sebi’s no-objection to once again file its DRHP. Several NSE investors were forced to sell their shares in the open market due to the indefinite delay in its IPO.

Those who continue to remain shareholders must be hoping that the latest controversy doesn’t lead to another long delay in NSE’s listing plan.