High Level Committee Recommendations

The High Level Committee (HLC) established by the Securities and Exchange Board of India (Sebi) has proposed several key recommendations to address conflicts of interest among its board members. These include a multi-tier disclosure regime, investment restrictions, a strong recusal framework, and a robust whistle-blower mechanism.

Key Recommendations

• Disclosure Requirements:
  • Chairman, whole-time members (WTMs), and employees at the level of chief general manager (CGM) and above should publicly disclose assets and liabilities.
  • All Sebi employees, the Chairman, and Board members must internally disclose the names and relationships of relatives per the Companies Act, 2013, as well as professional and other relational interests.
• Investment Restrictions:
  • Uniform restrictions on investments and trading for the chairperson, WTMs, and employees.
  • New investments allowed in professionally managed schemes regulated by financial sector regulators in the country.
  • Investment restrictions to apply prospectively.
• Definition of 'Insider':
  • Chairman and WTMs to be categorized as 'insiders' under the Sebi (Prohibition of Insider Trading) Regulations, 2015.
• Family Definition:
  • Align family definition with international best practices, including spouse, dependent children, legal guardianship, and substantially dependent relatives.
• Gifts and Recusal Framework:
  • Prohibit acceptance of gifts by the chairman and WTMs from those with potential official dealings.
  • Summary of recusals by senior members to be published in Sebi's Annual Report.
• Post-Retirement Restrictions:
  • Former members or employees cannot appear before or against Sebi in specific matters for two years post-retirement.
• Whistle-Blower Mechanism:
  • Establish a secure, confidential, and anonymous system for reporting conflicts of interest.

Committee Composition

The committee is chaired by Pratyush Sinha, a retired IAS officer, and former Chief Vigilance Commissioner. Other notable members include Injeti Srinivas, Uday Kotak, G Mahalingam, Sarit Jafa, and R Narayanaswamy.

Background Context

The committee was formed following allegations against former SEBI chief Madhabi Puri Buch by Hindenburg Research regarding conflicts of interest. The committee's recommendations aim to bring transparency and integrity to Sebi's operations.