In its crackdown against market manipulations and other violations, Sebi goes by facts of the case and the culprits being a big corporate house or a little-known individual become irrelevant, says its chief UK Sinha.
"The message and mantra for Sebi is that we go by the facts of the case, irrespective of whether you are big or small. We have to apply same principle and be fast, that is our approach," Sinha said. The Securities and Exchange Board of India (Sebi) Chairman was replying to a question on different sets of criticism often faced by Sebi with regard to its actions against big players.
At times, Sebi has been accused of easily letting off big players, while many large corporate houses have also complained that the capital markets watchdog gets harsher with them to send across a stronger message. When asked what gets more importance between big players and big violations while dealing with manipulations and other violations, Sebi chief said: "I am happy that you have given both the examples. We do receive complaints from both the sides.
"However, I think both sides are overplayed and the fact lies somewhere in between." Explaining further, the Sebi chairman said that earlier there was a perception that big people can get away by consent settlement mechanism. He, however, did not take any names. "Now, we have made the consent mechanism so water-tight that offences that are of serious nature, they cannot be consented.
"We have clarified that through our May 2012 circular. Now, the consent mechanism have been further tightened and the new Ordinance has put the consent process on a very strong pedestal and it has been given a clear-cut legal backing," Sinha said. Among others, Mukesh Ambani-led Reliance Industries group have challenged a Sebi decision for not considering a consent settlement plea for an alleged insider trading case.
Some other large corporates that have faced Sebi action include Sahara group, Anil Ambani-led Reliance Group, as also a host of politically connected entities in relation to fraudulent investment schemes. Sebi is also working on a new new Corporate Governance Code for listed companies, where requirements could be tougher for larger entities requiring them to justify high executive salaries, putting in place an orderly succession plan and adopting a whistle-blower policy.
The code is being put in place after taking into account public comments to draft corporate governance norms released by capital markets regulator earlier this year as well as the related provisions in the new Companies Act, 2013. "The new Companies Act has brought in a new dimension and a lot of clarity from corporate governance point of view," Sinha said.
"Our discussion paper on corporate governance is already in public domain for quite some time. We will be now taking a call on that," he added. The discussion paper was floated in January and the draft norms also seek to grant greater oversight by minority shareholders and independent directors and check any unjustifiable payments to related parties. It has also proposed to introduce a new concept of 'Corporate Governance Rating' by independent agencies to monitor the level of compliance by the listed companies, in addition to regular inspection by Sebi and stock exchanges.
While Sinha did not disclose the details of final set of regulations in this regard, he said that corporate governance has been one of the key focus areas for Sebi over the past one year and the regulator is looking to further enhance the compliance standards of listed companies.
According to Sebi discussion paper on this issue, "on average, the remuneration paid to CEOs in certain Indian companies are far higher than the remuneration received by their foreign counterparts and there is no justification available to that effect."
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