Programme linked to stock lending and borrowing
Companies to decide allowance for independent directors50 p.c. of board members favoured as independent directors
GURGAON: The Securities and Exchange Board of India will soon come out with a policy statement on short selling of shares, its Chairman M. Damodaran said here on Monday.
After inaugurating a week-long Independent Directors' programme here for senior officers of armed forces, organised by the Management Development Institute, Mr. Damodaran told reporters that unless all issues relating to short selling were addressed, a decision could not be announced. All those concerned with the matter were being consulted, he added.
Short selling selling stocks without actually owning them or selling them by delivering borrowed stocks is now permitted for retail investors.
The issue of allowing institutional investors to short sell is linked to the programme for stock lending and borrowing.
The stock lending and borrowing programme was in vogue for institutional investors until 1997 under FERA, which was replaced with FEMA in 1999-2000. Now the issue is whether the proposed lending and borrowing programme could be allowed for foreign institutional investors under FEMA.
A revised scheme for lending and borrowing stocks was prepared after the stock markets experienced a huge volatility in May.
Earlier addressing the senior armed forces officers, Mr. Damodaran said companies had to decide the appropriate allowance for independent directors.
When asked whether there were instances of de-listing of any company in case it had not complied with Clause 49 of the listing agreement, he said: "Not to my knowledge.''
Defending the numerical strength of independent directors under Clause 49, he said it was thought to be fit to have at least 50 per cent of the total board members as independent in case both Chairman and CEO of a company were the same person. PTI