Amidst the recent controversy over the dubious appointments, severe lapses in corporate governance and a spate of ongoing investigations, the National Stock Exchange (NSE) has begun the hunt for a new managing director (MD) and chief executive officer (CEO).
In an advertisement published today, the Exchange has invited applications from candidates with initial public offering (IPO) experience. The five-year term of Vikram Limaye, NSE's incumbent MD and CEO, ends on 16 July 2022 and he is eligible to apply for another term. The Securities and Exchange Board of India (SEBI) stipulates that the incumbent has to compete with another candidate to win his next term, so it is possible that the advertisement is a mere formality. It is not immediately known if he is seeking a second term. Mr Limaye was appointed in July 2017 replacing Chitra Ramkrishna who stepped down in December 2016 citing ‘personal reasons’.
NSE’s past practice of appointing MDs without proper processes has now turned controversial. The manipulation of the appointment process by an NSE committee (appointed by the board and including senior directors) has been documented in the book
Absolute Power by the editors of
Moneylife Sucheta Dalal and Debashis Basu. The post of non-executive vice-chairman for Ravi Narain, when he stepped down as MD was similarly problematic. This time around, the appointment process will take place under a new chairperson at the Securities and Exchange Board of India (SEBI) and at a time when NSE’s actions over the past decade are under scrutiny and being investigated by the Central Bureau of Investigation (CBI). Anand Subramanian, the former group operating officer (GOO) who was appointed in violation of all internal rules and HR practices is under arrest and both Chitra Ramkrishna and Ravi Narain, from the founding team, have been interrogated.
The NSE advertisement for MD candidates requires them to have a track record of strengthening corporate governance, enterprise risk management and compliance management framework. Further, the notice says candidates with exposure to working in a publicly listed company or having led an organisation through an initial public offering process “will be an added advantage”. The committee has to select at least two names (of which one has to be an external candidate), which will be sent to SEBI for approval after which it has to be cleared by shareholders.
Since stock exchanges and depositories are key market infrastructure companies, SEBI has the final say on the appointment of the MD and CEO. Hence, there is growing trepidation that the government may interfere and try to colour or, even worse, scuttle the ongoing probe.
Allegations of corporate governance lapses have been plaguing NSE for several years. The probe into what is called the co-location (Colo) scam, where certain top brokers were allowed to profit from faster access to NSE systems had derailed NSE’s plan to go public in 2017. This has been further complicated by a fresh order dated 11th February on how the former MD, Chitra Ramkrishna was embarrassingly sharing information with someone she claims is a Himalayan Yogi who also communicated with her on email, copying his emails to her personal appointee Anand Subramanian.
Moneylife was the
first to expose this scam in mid-2015, for which NSE had filed a defamation case against us. A single judge in Bombay High Court dismissed the frivolous suit and ordered the NSE to pay a fine of Rs50 lakh (mainly to two Mumbai hospitals). After filing an appeal against the order, NSE paid up the penalty. Meanwhile, in the wake of the scam, the top brass of NSE had to resign and a new management team took charge.
This 25 years of experience entry criteria, will again bring those old folks with corrupted friends and acquaintances, back into places of power where they shouldn't be allowed.
Even after such a big scandal, investors are eagerly awaiting for NSE IPO.