The Securities and Exchange Board of India (SEBI), on Thursday, notified norms for ownership and governance of market infrastructure institutions, including stock exchanges, which should have a minimum net worth of Rs.100 crore at all times and at least 51 per cent of stake has to be held by the public.
The market regulator said that the existing regulations for Manner of Increasing and Maintaining Public Shareholding (MIMPS) in recognised stock exchanges stand repealed after notification of these norms. The SEBI said that no person resident outside India, either individually or together with persons acting in concert, would be allowed to acquire or hold more than 5 per cent stake directly or indirectly in a stock exchange. However, domestic stock exchanges, depositories, banks, insurance companies and public financial institutions would be allowed to acquire or hold up to 15 per cent stake.
Individual shareholding would be capped at 5 per cent for all non-Indian entities without any exemptions, and their collective holding cannot exceed 49 per cent. Out of this, the holding through the FDI route would be capped at 26 per cent and that through FII at 23 per cent. No FII would be allowed to acquire shares of a recognised stock exchange otherwise than through secondary market.
For regulating the conflicts of interests in market infrastructure institutions, SEBI, would separately prescribe minimum listing standards for listing of companies on stock exchanges. However, the stock exchanges could prescribe more stringent norms, if they so desired.
Further, SEBI would set up a Conflicts Resolution Committee (CRC) with majority external and independent members to deal with all issues concerning conflicts of interest. The CRC will consider matters of policy, guidelines involving conflict issues and recommend standards that are pertinent to the areas of potential conflict in the Exchanges.
Further, issues of conflict will be referred by the exchanges or may be taken up suo moto by the CRC. The independent oversight committees of the exchanges for member regulation, listing functions, and trading and surveillance function, shall have a regular interaction with the CRC.
