Friday, December 5, 2008

Transparency Measures in SEBI

The Securities and Exchange Board of India ("SEBI") is taking significant and material steps towards bringing in transparency in its own workings.

First, the status of offer documents being processed by SEBI is now online. After repeated complaints about delays in clearing offer documents, SEBI now publishes every week, the status of the offer document under process. Therefore, the public gets to know what the status is. For an Indian regulator, this is a great start. One could say that the status can easily be obfuscated in verbiage that is not decipherable, but even to put that up and invite attention from the public is a big first.

Second, and more far-reaching move has been yesterday's decision to make all the agenda papers and the minutes of the proceedings of the SEBI board meetings public. This is a very significant measure because for the first time, people would get to know what is the regulatory thinking that went behind the provisions and the law formulated by SEBI. To my mind, this is a major step towards implementing a principle-based system. Courts can see what precisely SEBI had in mind. Now, of course, the minutes could be drafted in a very guarded manner, reveaing little, but putting those minutes in the public domain will also invite to how the regulator runs its shop.

If you want to read the very language that ushered in this change, here it is:-

In order to bring transparency in the working of the Board it was decided that the agenda papers submitted to the Board on all policy issues will be made available in the public domain by putting them up on the SEBI website after the Board has taken a decision on the issue. The minutes of the meeting relating to such items will also be made available on the SEBI website after the Board has approved the minutes. Accordingly the agenda papers for today’s Board meeting will be made available on the SEBI website by December 15, 2008.

Hopefully, other government agencies will build up courage to take this leap.

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