Guidelines for Fair Practices/ Code of Conduct for Public Representative and SEBI Nominee Directors
Summary
SEBI issued a circular in 2003 directing stock exchanges to amend their rules to include guidelines for the conduct of Public Representatives and SEBI Nominee Directors. These guidelines mandate specific obligations regarding meeting attendance, conflict of interest disclosure, strategic planning participation, and regulatory compliance. The directive was issued under Section 11(1) of the SEBI Act to protect investor interests and promote market integrity. This section outlines the regulatory framework for the issuance and trading of securities, including specific thresholds for public offers. It details the requirements for prospectus preparation, content standards, and liability for misstatements or omissions. The text further specifies exemptions for certain types of issuers and transactions under the relevant securities laws.
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endeavour to attend all the board meetings and shall be liable to vacate his office if he remains absent for three consecutive meetings of the Board of Directors or does not attend 75% of the total meetings of the Board in a calendar year.
not participate in the discussion of any subject matter in which any conflict of interest exists or arises, whether pecuniary or otherwise, and in such cases the same shall be disclosed and recorded in the minutes of the meeting.
not support any decision in the meeting of the Governing Board which may adversely affect the interest of investors and shall report forthwith any such decision to SEBI.
unless otherwise required by law, maintain confidentiality and shall not divulge/disclose any information obtained in the discharge of their duty. Further, no such information shall be used for personal gain.
maintain the highest standards of personal integrity, truthfulness, honesty and fortitude in discharge of his duties in order to inspire public confidence and shall not engage in acts discreditable to his responsibilities.
not engage in any act involving moral turpitude, dishonesty, fraud, deceit, or misrepresentation or any other act prejudicial to the administration of the exchange.
Accordingly, the Exchanges are directed to make necessary amendments to the Rules or Articles of Association for the implementation of the above decision.
Any person making a public offer must ensure that the offer does not exceed 75% of the paid-up capital unless exempted.
Exemptions are granted to specific categories of entities such as government companies, statutory corporations, and entities issuing compulsorily convertible instruments.
A prospectus must be filed with the Registrar and contain all material facts regarding the issuer's business, financials, and risks.
Issuers and experts are liable for any loss or damage arising from untrue statements or non-disclosure of material facts in the prospectus.
Underwriting agreements must be entered into before the filing of the prospectus and must specify the commission payable.
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Source: SecMarx — Guidelines for Fair Practices/ Code of Conduct for Public Representative and SEBI Nominee Directors. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.