Adequate financial powers to Executive Directors - SEBI - SMD/Policy/Cir-8/2003

Circulars General Manager Secondary Market Department e-mail : [email protected] SMD/Policy/Cir-8/2003 March 4, 2003 The Executive Directors / Managing Directors All the stock exchanges. Dear Sir, Sub: Adequate financial powers to Executive Directors We had vide our circular no. 25/1999 dated August 12, 1999 advised the stock exchanges to accord adequate financial powers to the executive director of the stock exchanges for the smooth functioning of the stock exchange. The issue of the adequacy of the financial powers of the Executive Directors has also been covered in the report of the Mayya Committee on Model Rules at para no. 6.20. Further in the text of the model rules at para no. 8.2.4.4. of Part B of our circular dated December 20, 2001 where it was advised to implement the model rules as given therein it has been stated that the Governing Board shall authorize the executives of the exchange to sign cheques upto such amount as may be decided by the Governing Board and above this amount, the Governing Board shall authorize the office bearers of the exchange, including the executive director to sign the cheques. As per our directions dated January 10, 2002, no broker of the stock exchange shall be office bearer of an exchange i.e. hold the position of President, Vice President, Treasurer, etc. This in effect would mean that the member broker directors on the Governing Boards of the stock exchanges shall not be eligible to sign cheques on behalf of the stock exchange. As the Joint Parliamentary Committee in its Report has taken a strong objection to the broker directors on the governing boards of the stock exchanges signing cheques, it has been decided that the stock exchanges shall provide specifically in its rules, that no broker director shall be authorized to sign any cheques or operate any bank accounts on behalf of the stock exchange. Yours faithfully P K Bindlish