Schedule - II (Part - H) - Appointment of Directors - Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2018

PART H Appointment of Directors [See regulation 24 and 25] 2 [(I) ] Procedure for appointment:- (1) All directors while seeking approval shall submit to the stock exchange/clearing corporation the following details:- (a) Name (b) Address (c) Educational qualification (d) Details of employment/ Occupation, past and present (e) Details of other directorships (f) DIN No. (g) Declaration regarding the fulfillment of requirements specified under regulation 20 of these Regulations. (h) Declaration confirming compliance of Regulation 23 (6) read with Regulation 2 (1) (b) of these Regulations, in respect of non-association with trading member or clearing member. (i) Details of regulatory action taken against by any statutory authority in India. (j) Details of activities that may in the opinion of the director, lead to his disqualification. (k) Association with trading members/clearing members of stock exchanges/clearing corporations. (l) Disclosure of the names of his dependents associated with the securities market as member, sub-broker, authorized person or holding any SEBI registration. (m) An undertaking that he shall abide by the code of conduct and code of ethics prescribed in Part A and Part B of Schedule II to these Regulations. (n) In the case of public interest directors, consent letters for acting as a public interest director. (o) Pending / completed criminal cases pending before any authority in India or abroad, if any. 9 [ (2) The recognised stock exchange or recognised clearing corporation shall forward the above details to the Board while recommending their names along with the minutes of the governing board meeting where their name(s) was approved, copy of the shareholders resolution (wherever applicable) and a confirmation by the recognised stock exchange or recognised clearing corporation that they are fit and proper persons in terms of the fit and proper criteria, are not associated with any trading member or clearing member in terms of regulation 23 (6) read with regulation 2 (1) (b) of these regulations and compliance with the requirements specified in regulation 23 (14). ] 3 [(II) ] Managing Director / Executive Director:- (1) The Nomination and Remuneration Committee of the recognized stock exchange/ recognized clearing corporation shall be responsible for selection of CEO /Managing Director / Executive Director, as the case may be. The managing director shall be selected through open advertisement in all editions of atleast one national daily from amongst persons qualified in the fields of capital market/ finance/ management and possessing sufficient experience. 1 [ The stock exchange/ clearing corporation shall forward the new names to the Board before two months from the last working day of the existing Managing Director. ] (2) In case a vacancy of managing director arises due to unforeseen reasons, the stock exchange/ clearing corporation shall forward the new names to the Board within 60 days from the date of submission of resignation or such vacation of office. 4 [(III) ] Public Interest Directors:- 10 [ (1) The names of the public interest directors shall be forwarded to the Board after the approval of the governing board of the recognised stock exchange or recognised clearing corporation. The shareholders approval shall not be necessary. A minimum of two names shall be submitted to the Board for each vacancy of public interest directors, two months before such vacancy. ] (2) The stock exchange/ clearing corporation shall ensure that public interest directors are selected from diverse field of work. While deciding to propose a particular person as a public interest director, the stock exchange/ clearing corporation shall also take into account the following factors: 11 [ (a) Qualifications as specified in sub-regulation (14) of regulation 23. ] 12 [ **** ] (c) Persons currently holding positions of trust and responsibility in reputed organisations or person who have retired from such positions. (d) Persons who are likely to have interested positions in commercial contracts and financial affairs of stock exchanges, may preferably be excluded. Persons who are regular traders/ speculators in the market or are director in the board of the promoter entity of the Stock Exchange or Clearing Corporation, shall be excluded. 13 [ (3) Public interest directors shall peruse the relevant laws, code of conduct, etc. and submit an undertaking to the recognised stock exchange or recognised clearing corporation that they are aware of their role, responsibilities and obligations. ] 14 [ (4) In case of reappointment of the public interest director, the recognised stock exchange or recognised clearing corporation shall apply to the Board four months before the expiry of the term. In addition to the other requirements specified herein, the application for reappointment of the public interest director shall be accompanied with, their attendance details on meetings of various mandatory committees and on the governing board of the recognised stock exchange or recognised clearing corporation, performance review and the reasons for extension of term. ] 15 [ (5) The existing public interest director, may continue holding the post for a maximum period of three months from the date of expiry of their term or till a new public interest director is appointed, whichever is earlier, only if the governing board does not meet the mandatory regulatory requirements on its composition. ] 5 [(IV) ] 16 [non-independent directors.] (1) The names of persons to be appointed as 17 [ non-independent directors ] shall first be approved by the governing board of the stock exchange/ clearing corporation, followed by shareholders approval before submitting the same to the Board for approval. 18 [ (2) The manner of election, appointment, tenure, resignation, vacation, etc. of non-independent directors shall be governed by the provisions applicable to shareholder directors under the Companies Act, 2013 save as otherwise specifically provided under these Regulations or in accordance with the Act and circulars issued thereunder. ] 20 [****] 7 [(VI) ] General conditions on appointment of directors:- (1) The stock exchange/ clearing corporation shall complete the appointment process within 30 days from nomination/approval for directors by the Board and submit a compliance report within one week from the date of appointment. 8 [ (1A) The limited purpose clearing corporation shall complete the appointment process for the managing directors within thirty days from the date of approval of the Reserve Bank of India and submit a compliance report within one week from the date of appointment. ] (2) In case any other official of the stock exchange/ clearing corporation is appointed on the governing board in addition to the Managing Director, the same shall be subject to the approval of shareholders and the Board, in that order. 19 [ (VII) The recognised stock exchange and recognised clearing corporation shall provide at least seven days of training to all directors each year. ] ************** NOTES:- 1. Substituted vide NOTIFICATION No. SEBI/LAD-NRO/GN/2019/21 dated 04-06-2019 before it was read as, In case of re-appointment, or extension of appointment, the stock exchange/ clearing corporation shall apply to the Board two months before the last working day of such Managing Director. 2. Inserted vide NOTIFICATION No. SEBI/LAD-NRO/GN/2019/21 dated 04-06-2019 3. Inserted vide NOTIFICATION No. SEBI/LAD-NRO/GN/2019/21 dated 04-06-2019 4. Inserted vide NOTIFICATION No. SEBI/LAD-NRO/GN/2019/21 dated 04-06-2019 5. Inserted vide NOTIFICATION No. SEBI/LAD-NRO/GN/2019/21 dated 04-06-2019 6. Inserted vide NOTIFICATION No. SEBI/LAD-NRO/GN/2019/21 dated 04-06-2019 7. Inserted vide NOTIFICATION No. SEBI/LAD-NRO/GN/2019/21 dated 04-06-2019 8. Inserted vide Notification No. SEBI/LAD-NRO/GN/2022/93 dated 11-08-2022 9. Substituted vide Notification No. SEBI/LAD-NRO/GN/2023/124 dated 28-02-2023 (shall come into force on the one hundred and eightieth day from the date of their publication in the Official Gazette) before it was read as, (2) The stock exchange/ clearing corporation shall forward the above details to the Board while recommending their names along with the minutes of the governing board meeting where their name/s was approved, copy of the shareholder s resolution (wherever applicable), a confirmation by the stock exchange/ clearing corporation that they are fit and proper persons in terms of their fit and proper criteria and are not associated with any trading member or clearing member in terms of regulation 23 (6) read with regulation 2 (1) (b) of these Regulations. 10. Substituted vide Notification No. SEBI/LAD-NRO/GN/2023/124 dated 28-02-2023 (shall come into force on the one hundred and eightieth day from the date of their publication in the Official Gazette) before it was read as, (1) The names of public interest directors shall be forwarded to the Board after the approval of the Board of the stock exchange/clearing corporation. The shareholders approval shall not be necessary. A minimum of two names shall be submitted to the Board for each vacancy of public interest directors. 11. Substituted vide Notification No. SEBI/LAD-NRO/GN/2023/124 dated 28-02-2023 (shall come into force on the one hundred and eightieth day from the date of their publication in the Official Gazette) before it was read as, (a) Qualification in the area of law, finance, accounting, economics, management, administration or any other area relevant to the financial markets. 12. Omitted vide Notification No. SEBI/LAD-NRO/GN/2023/124 dated 28-02-2023 (shall come into force on the one hundred and eightieth day from the date of their publication in the Official Gazette) before it was read as, (b) Atleast one person shall be inducted having experience and background in finance / accounts who may preferably be inducted in the audit committee. 13. Substituted vide Notification No. SEBI/LAD-NRO/GN/2023/124 dated 28-02-2023 (shall come into force on the one hundred and eightieth day from the date of their publication in the Official Gazette) before it was read as, (3) Public interest directors shall peruse the relevant laws, code of conduct, code of ethics, etc and submit an undertaking to the stock exchange/clearing corporation that they are aware of their role, responsibilities and obligations. The stock exchange/clearing corporation shall provide at least seven days of training to every public interest director each year. 14. Substituted vide Notification No. SEBI/LAD-NRO/GN/2023/124 dated 28-02-2023 (shall come into force on the one hundred and eightieth day from the date of their publication in the Official Gazette) before it was read as, (4) In case of extension of the term of the public interest director or appointment of a new public interest director, the stock exchange/ clearing corporation shall apply to the Board two months before the expiry of the term. In addition to the other requirements prescribed herein, the application for extension of term of the public interest director shall be accompanied with, his attendance details on meetings of various mandatory committees and on the governing board of the stock exchange / clearing corporation, performance review and the reasons for extension of term. 15. Substituted vide Notification No. SEBI/LAD-NRO/GN/2023/124 dated 28-02-2023 (shall come into force on the one hundred and eightieth day from the date of their publication in the Official Gazette) before it was read as, (5) The existing public interest director shall continue holding the post, till a new public interest director is appointed in his place. 16. Substituted vide Notification No. SEBI/LAD-NRO/GN/2023/124 dated 28-02-2023 (shall come into force on the one hundred and eightieth day from the date of their publication in the Official Gazette) before it was read as, Share Holder Directors 17. Substituted vide Notification No. SEBI/LAD-NRO/GN/2023/124 dated 28-02-2023 (shall come into force on the one hundred and eightieth day from the date of their publication in the Official Gazette) before it was read as, shareholder directors 18. Substituted vide Notification No. SEBI/LAD-NRO/GN/2023/124 dated 28-02-2023 (shall come into force on the one hundred and eightieth day from the date of their publication in the Official Gazette) before it was read as, (2) The manner of election, appointment, tenure, resignation, vacation, etc. of shareholder directors shall be governed by the Companies Act, 2013 save as otherwise specifically provided under the these Regulations or in accordance with the Securities Contracts (Regulation) Act, 1956, circulars issued thereunder. 19. Inserted vide Notification No. SEBI/LAD-NRO/GN/2023/124 dated 28-02-2023 (shall come into force on the one hundred and eightieth day from the date of their publication in the Official Gazette) 20. Omitted vide Notification No. SEBI/LAD-NRO/GN/2024/196 dated 29-07-2024 before it was read as, 6 [(V)] Selection of trading members/clearing members on the Advisory Committee to the governing board:- (1) Prior to the appointment to the advisory committee, the governing board of the stock exchange/ clearing corporation shall satisfy itself that the trading members/ clearing members are fit and proper persons in terms of regulation 20 of the these Regulations. The governing board shall frame the eligibility norms, term of office, cooling off period etc., of members of the advisory committee in consultation with the trading members/clearing members of the stock exchange/ clearing corporation.