SEBI Board Meet
SEBI waives 1-year cool-off period for public directors at mkt infra entities
This story was originally published at 19:35 IST on 24 March 2025
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--SEBI: Mkt infra entity may set cooling-off period for key officials leaving
NEW DELHI – Public interest directors leaving market infrastructure institutions and joining competing entities will no longer be subject to a Securities and Exchange Board of India-mandated cool-off period, the market regulator decided during its board meeting on Monday. As per the current SEBI norms, public interest directors may join competing market infrastructure entities only after a one-year cooling-off period.
Stock exchanges, clearing corporations, and depositories are market infrastructure institutions. The function of public interest directors is similar to that of independent directors, and their appointment is not subject to the approval of shareholders, but only that of the SEBI.
SEBI said the governing board of the market infrastructure institutes can prescribe a minimum cooling-off period for its key managerial personnel and directors, including managing directors and public interest directors before joining a competing entity.
The SEBI has decided that while the existing process of appointment of public interest directors shall continue, it will no longer prescribe a cooling-off period for the directors who are transitioning from one market infrastructure institute to another. However, if the governing board of a market entity decides not to re-appoint an existing director after their first term, it must inform the regulator of the rationale behind such a decision.
The market regulator had floated a consultation paper in August 2024 regarding the appointment of public interest directors, wherein it proposed that the one-year cooling-off period that these directors are subject to shall be applicable only if they join a competitor market infrastructure institution or associate of the company.
A lack of "quality public interest directors" in the market prompted this proposal. "Further, there is skilled and well-trained PIDs (public interest directors) available that cannot be utilised because of this blanket restriction of one year cooling off period," the consultation paper said. End
Reported by Anand JC
Edited by Akul Nishant Akhoury
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