SEBI Tightens MII KMP Hiring & Exit Rules – 3-Tier Process

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  • Last Updated on 29 May, 2025

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SEBI MII KMP appointment

Circular No. SEBI/HO/MRD/MRD-PoD-3/P/CIR/2025/75; Dated: 26.05.2025

1. Regulatory Context

On 26 May 2025, SEBI issued Circular SEBI/HO/MRD/MRD-PoD-3/P/CIR/2025/75 prescribing a uniform, three-tier framework for the appointment, re-appointment, termination, or acceptance of resignation of certain Key Managerial Personnel (KMPs) in Market Infrastructure Institutions (MIIs) such as stock exchanges, clearing corporations and depositories. The same circular also tweaks the re-appointment rules for Public Interest Directors (PIDs) and introduces a flexible cooling-off regime.

2. Revised Appointment Workflow

  1. Independent External Agency (IEA) – MII engages an IEA to identify and vet suitable candidates.
  2. Nomination & Remuneration Committee (NRC) – Evaluates the IEA’s panel, interacts with management, and forwards its recommendation.
  3. Governing Board – Takes the final call on appointing the KMP.

This three-step model must be followed for every fresh appointment made on or after the circular’s effective date.

3. Cooling-off Period for Moving to a Competing MII

The mandatory one-year bar in the SECC/D&P Regulations has been replaced with a board-determined cooling-off period for KMPs (including the MD) who wish to join a competing MII. Each MII must lay down its own policy and publish it.

4. Re-appointment of Public Interest Directors (PIDs)

If an MII’s Governing Board decides not to re-appoint a PID for a second term, it must record a detailed rationale and inform SEBI. This aims to bolster transparency and guard against arbitrary board decisions.

5. Practical Implications for MIIs

  • Stronger governance lens – External short-listing and NRC vetting reduce in-house bias.
  • Talent pipeline planning – Engaging an IEA early will shorten hiring cycles when key posts fall vacant.
  • Greater accountability – Documented board justifications for PID changes will face regulatory scrutiny.
  • Competitive mobility – Flexible cooling-off allows boards to balance talent movement with confidentiality risks.

MIIs should begin mapping current KMP contracts and PID terms against the new framework to ensure seamless transition by late August 2025 (90-day window).

Click Here To Read The Full Circular

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Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied