Independent directors must keep public interest in mind: U K Sinha

U K Sinha

Independent directors (IDs) of listed companies should keep in mind the interests of public shareholders, Securities and Exchange Board of India (Sebi) Chairman U K Sinha has said.

The events within the Tata group have put a spotlight on the role and function of IDs on the boards of India Inc.

“(These) directors have a fiduciary duty to perform. They have their loyalty and obligation towards all the shareholders, so they must keep their interests in mind. Besides, they have to act according to Sebi and Companies Act guidelines,” Sinha said on Thursday at a conference here on financial markets.

Reacting to the criticism on Sebi's proposal to curb unauthorised stock tips on social media, he said, “I have received messages advocating buying stocks. Instead of criticising the regulator stand on investment advisors, I offer you to provide a solution. All the suggestions would be received very seriously.”Earlier this week, the market regulator extended the deadline till November 30 for public comments on the proposed norms to regulate investment advisors. It has proposed to ban unauthorised trading tips through platforms such as WhatsApp, Twitter and Facebook.

“Investors are being misled and Sebi can't be expected to stay silent on that,” said Sinha.

On measures taken regarding the primary markets, he said, “We are working on shortening the gap between an initial public offer (of equity) and the listing of shares to four days, from six days currently.\"

Citing global examples, Sinha urged investors and companies to take cognisance of developments on corporate governance. “There are several examples of board resolutions being defeated on excessive CEO compensation in Fortune 500 companies. I urge corporate India to take note of these,” he said.

The Sebi chief indicated they'd soon propose regulations on co-location and high frequency trading. On infrastructure investment trusts, Sinha said of the six applications, four had been approved.

Sinha said there would be some new rules issued before his term ended in March 2017.