SEBI strengthens governance framework at MIIs; mandates appointment of 2 executive directors
Under the new structure, the ED of Vertical 1 will head "critical operations", while the ED of Vertical 2 will oversee regulatory functions, compliance, risk management and investor grievances.
To ensure transparency in hiring, Sebi has directed that applications for ED positions be invited through open advertisements. Applicants are required to have relevant experience and qualifications for their respective verticals, according to its circular.
Further, MIIs will be required to submit at least two names without preference for each ED position to Sebi for approval, along with the proposed compensation package.
Also, the regulator has specified timelines for continuity in leadership. MIIs are required to forward names for ED positions at least two months before the term of an incumbent ED ends.
Public Interest Directors (PIDs) will oversee performance assessments of EDs based on an annual evaluation mechanism aligned with the process used for Managing Directors (MDs).
Recognising that MIIs vary in size, financial strength and growth stages, Sebi has allowed flexibility in implementation. MIIs facing genuine operational constraints may seek time-bound exemptions, which will be evaluated on a case-by-case basis.
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