Mumbai: Within a week of taking charge, U.K. Sinha, the new chairman of capital market regulator Securities and Exchange Board of India (Sebi), has initiated plans to revamp the organization.
Sinha circulated a note last Thursday on the review of eight advisory committees that are currently working under Sebi.
The new chairman has sought opinion from all department heads about the scope of the proposed reconstitution, said two persons with direct knowledge of the matter. “He wants to take a fresh look at the issues handled by these committees,” one of them said.
“The chairman has asked about the relevance of all the existing members of such committees,” the second person said. Both officials requested anonymity as the matter is yet to be made public.
Sinha has proposed to look into the tenure of the members of such committees, their contribution to Sebi’s policies and the relevance of their recommendations.
An email sent to Sebi on Friday remained unanswered.
A Sebi official, on condition of anonymity, said exploration of the scope of reconstitution of the committees is only part of the new chairman’s plan.
“He wants to take a fresh look at the ways the entire organization has been working. At the second stage, possible changes will be made,” the official said. “One should not view the proposed reconstitution of the committees in isolation.”
There are eight Sebi advisory committees on mutual funds, the secondary market, the primary market, corporate bonds and securitization, investor protection and education fund, disclosures and accounting standards, consent orders and compounding of offences, and the takeover panel.
Incidentally, Sinha has been a member of at least two such committees—the committees on mutual funds and the secondary market—as chairman of UTI Asset Management Co. Ltd, his previous assignment.
“Sometimes, the chairman may have a reform agenda and he may want to bring in new committee members to suggest ways to bring changes,” said one of the members of the committee for disclosures and accounting standards. He declined to be named.
The Sebi chairman has the authority to reconstitute committees, form new committees, and close or merge any of them. Under the stewardship of Sinha’s predecessor C.B. Bhave, who stepped down on 17 February, the regulator formed a new statutory committee to review and suggest changes for India’s takeover regulations.
During the tenure of M. Damodaran, whom Bhave replaced, the committee on disclosures and accounting standards was formed by merging two panels on disclosures and accounting standards.
Typically, a member serves on a committee for three years, but there is no fixed term.
“It’s not a statutory requirement to reconstitute advisory committees when the chairman changes. The members of advisory committee could be a continuity from one chairman to another,” said Susan Thomas, member of the secondary market advisory committee, and assistant professor, Indira Gandhi Institute of Development Research.
“Mere change in the constitution of committees may not help. Sebi may ensure regularity of meetings of these committees. Sometimes the committees do not meet for several quarters and this prevents continuity in reforms in line with the evolution of markets,” said H.N. Sinor, a member of the advisory committee on mutual funds and chief executive officer, Association of Mutual Funds in India.
Bhave went up against companies and other regulators during his tenure as part of efforts to enhance transparency and benefit investors.
On Sinha’s agenda are a new framework for mergers and acquisitions for Indian companies (following the recommendations of the takeover regulations advisory committee headed by C. Achuthan, former chief of the Securities Appellate Tribunal), new guidelines for market infrastructure institutions, such as stock exchanges, and depositories and clearing corporations (following recommendations by a panel headed by former Reserve Bank of India governor Bimal Jalan), among others.
“Since a new incumbent can’t change senior officials of the organization, he may try to bring in new voices as advisers. It makes sense to bring new members in the advisory committees for a fresh perspectives on critical issues,” said a member of the secondary market advisory committee, requesting anonymity.