SEBI introduces definition of a ‘non-independent director’ under SEBI Regulations

Notification No. SEBI/LAD-NRO/GN/2023/125., Dated 28.02.2023

The SEBI has notified the SEBI (Depositories and Participants) (Amendment) Regulations, 2023. As per the amended norms, SEBI has introduced a new definition of a non-independent director. The term “non-independent director” means a director elected or nominated by the shareholders who are neither depository participants nor their associates and agents.

In addition, the definition of KMPs under regulation 2(1)(k) has been enhanced to include reporting officials of KMP, any person defined as KMP under the Companies Act 2013, etc.

Further, the governing board of a depository shall comprise of qualified and experienced directors in the field of capital markets, finance and accountancy, legal and regulatory practice, technology, risk management, and management or administration.

In addition to the qualifications and experience, a depository may also appoint directors with specific qualifications and experience. However, the depository must ensure that the governing body collectively comprises of directors with the necessary qualifications and experience.

The Board must include at least one public interest director having the requisite qualification and experience in each of the areas of capital markets, finance and accountancy, legal and regulatory practice, and technology.

Also, the SEBI has prescribed a code of conduct for depositories and participants to ensure that they adhere to high standards of ethics, transparency and accountability.

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