SEBI has introduced a strict code of conduct requiring its board members to disclose financial assets, properties, and liabilities. This framework aims to increase transparency by managing conflicts of interest and mandating recusal reporting. The move follows recent board approvals to establish an Office of Ethics and Compliance.
The Securities and Exchange Board of India (SEBI) has formalised a new code of conduct for its top leadership, setting a clear framework to prevent potential conflicts of interest. The policy applies to both Whole-Time Members and Part-Time Members, requiring them to provide regular updates on their personal finances and professional connections.
Disclosure Norms for Board Members
Under the new guidelines, officials must report a wide range of personal information. This includes details of immovable properties, financial investments, and existing liabilities. For liabilities, any amount exceeding ₹2 lakh must be disclosed. Additionally, transactions in financial assets are reportable if they exceed twice the official's monthly basic salary. These requirements also extend to family members, covering investments in equity and equity-linked instruments.
To balance transparency with privacy, the regulator will publish details regarding immovable properties without disclosing full residential addresses. Members are also required to declare their professional engagements and interests from the past three years. This level of oversight is intended to ensure that regulatory decisions remain free from external influence.
Strengthening Institutional Integrity
A key feature of this framework is the formal process for recusals, which happens when a member steps away from a decision-making process due to a potential conflict. SEBI will now publish a standardized report in its annual filings detailing the number of recusals made by the Chairperson, members, and senior executives like Executive Directors and Chief General Managers.
This policy is part of a broader push to modernize governance within the regulator. Earlier, the SEBI board approved the creation of an Office of Ethics and Compliance, which will now be responsible for monitoring adherence to these rules. Investors often view such governance updates as a positive step toward ensuring that market regulations are implemented impartially. The primary monitorable for the market will be the transparency and consistency with which these new disclosure formats are applied in future annual reports and regulatory proceedings.