In wide-ranging overhaul of rules governing ‘good business practices’ of listed companies and their top executives, Sebi will soon unveil a new Corporate Governance Code and revamp insider trading norms.
The new corporate governance code would require all listed companies to justify their high executive salaries, put in place an orderly succession plan, adopt a whistle-blower policy for employees and limit the number of directorship a person can hold on company boards, besides various other measures to safeguard the interest of minority shareholders.
These new corporate governance norms, along with an overhaul of nearly two decade-old insider trading norms, would be discussed and finalised after Sebi’s next board meeting later this month, a senior official said.
The new norms would ensure that those indulging in unlawful insider trading activities are dealt with severely. Many new categories of persons, including public servants, regulatory officials, judiciary and government officials, dealing with unpublished price-sensitive information are being brought under the purview of insider trading.
At the same time, new norms would also seek to clearly differentiate between ‘innocent mistakes’ and genuine transactions of company executives from the unlawful and serious trading offences.
Other issues likely to be discussed include additional fund-raising avenues in capital markets, including through real estate and infrastructure investment trusts, although a final decision on these fronts is expected only after the Government decides on tax treatment for such instruments.