SEBI chief set to get two more years at the helm

The Securities and Exchange Board of India (SEBI) Chairman U.K. Sinha is set to get two years’ extension when his three-year term ends next month.

“Prime Minister Manmohan Singh is expected to sign the order any time from now,” a senior Government official told Business Line , adding it was in line with policy related with five-year term for regulators. Sinha was first appointed as SEBI Chairman in February 2008.

The official said all formalities, including obtaining vigilance clearance, are almost complete and now the matter is at the last stage. Once the order is signed, Sinha will be the second SEBI Chairman, after D.R. Mehta, to be in office for five years. Sinha, an IAS Officer of Bihar cadre, took voluntary retirement before joining UTI Asset Management Company as Chairman and CEO. He was then appointed to head the regulatory body.

Key reforms Sinha’s three-year term has seen key reforms in the capital market such as introduction of electronic Initial Public Offer, strict norms for merchant bankers, norms for rejecting share issuance prospectus, expansion of mutual fund in smaller cities and towns, circuit filter on the listing date of shares, new category of foreign investors and better disclosure by the listed companies. Now, the regulator is working on new corporate governance code for listed companies in the light of the new Companies Act.

Sinha’s extension was evident after the Supreme Court upheld his appointment in November. The court had said that it was done fairly and in accordance with the established procedure. The court, in its order dated November 1, 2013, had dismissed a Public Interest Litigation. It also questioned the motive of the petitioner while terming the letter of former SEBI member K.M. Abraham to the Prime Minister as “motivated”. The petition was filed by Arun Kumar Agarwal against the appointment of Sinha as SEBI chief on February 18, 2011.

Tough stance Sinha’s tenure has seen SEBI taking action against very influential and powerful business houses such as Reliance Industries and Sahara group. It may be noted that SEBI had filed a contempt petition in the Supreme Court against Sahara in the Optionally Fully Convertible Debenture (OFCD) issue, and had refused to consider a consent application filed by Mukesh Ambani-led RIL in an alleged insider trading case as directed by the Securities Appellate Tribunal.

His term also witnessed a former SEBI Member K.M. Abraham writing a letter to the Prime Minister alleging that the Chairman was being “directly influenced” by the Finance Minister or Advisor to the Finance Minister. This was mentioned in the petition filed against Sinha’s appointment in the apex court.

> shishir.s@thehindu.co.in