Capital market regulator Securities and Exchange Board of India (SEBI) has come out with a code of conduct for members of its governing board in a move to raise its standards of corporate governance.

The code is aimed at ''avoiding conflict of interest for the members of the board and ensure that members conduct their duties in the manner that does not compromise their ability to accomplish its mandate or undermine the public confidence in the ability of members to discharge their responsibilities.'' SEBI said.

The code, adopted by the board in its meeting held on 4 December, is applicable to the chairman of the board as well.

The code includes provisions like disclosing holdings of shares by member of the board or that of their family members, non-acceptance of gifts from intermediaries, that is, regulated entities

Under the code of conduct, a member should take all steps necessary to ensure that any conflict of interests to which he may be subject to does not affect any decision of the board.

A member should disclose his/her interests which may conflict with his/her duties.

Members are barred from exploiting to their personal advantage, any personal or professional relationship with regulated entities or any employee of such entities;

A whole time member (WTM) should not hold any other office of profit or engage in any other professional activity, which entails receipt of salary or professional fees.

A member should disclose his holdings of shares and shareholdings of his/her family within 15 days of the assumption of office and also within 15 days of the close of the financial year.

A WTM should disclose substantial transactions by him and his/her family within 15 days of such transaction.

A member should not deal in securities of a company listed on a recognised stock exchange based on unpublished price sensitive information which he/she may have got access to.

A member, who is directly or indirectly interested in any matter coming up for consideration at a meeting of the board, should disclose the nature of his/her interest at such meeting.

A member should not take part in any deliberation or discussion of the board with respect to such matter except to the extent of professional advice if sought by the board.

No member should hear or decide any matter where he/she has a conflict of interest.

A member should disclose if he/she or his/her family has any dispute in respect of product or services availed from an intermediary.

A WTM should not accept any gift by whatever name called, to the extent possible, from a regulated entity.

A WTM should hand over the gift, if he/she receives any and the value exceeds Rs1,000, to the general services department of the SEBI.

A member should disclose the following:

a) any post, other employment or fiduciary position which a member holds, or
has held in the past 5 years in connection with any regulated entity;

b) any other significant relationship, including a professional, personal, financial or family relationship held in connection with a regulated entity; and

c) any honorary position, by whatever name called, in any organisation.

A member should disclose a conflict of interests at the earliest possible opportunity.

He/she should seek determination from the chairman if he/she has a doubt whether there is a conflict of interests or not.

Chairman should seek determination from the board if he has a doubt whether there is a conflict of interests or not.

If the chairman or the board, as the case may be, determines that there is a conflict of interests, the member or chairman shall refrain from dealing with the particular matter.

The chairman or the board, as the case may be, should assign that matter to another member or a committee of members.

Any person, who has reasonable ground to believe that a member has an interest in a particular matter, should bring the same with material evidence to the notice of secretary of the board.

The secretary of the board should place the details received under sub-clause (1) before the chairman in case of a member and before the board in case of the chairman.

The chairman or the board, as the case may be, should determine if the member or chairman has an interest which is likely to affect the decision by him.

The member or the chairman, as the case may be, should refrain from dealing with that particular matter if the chairman or the board determines that there is a
conflict of interests.

The chairman or the board, as the case may be, should assign that matter to another member or a committee of members.

The information as disclosed under this code should be kept confidential and should not be disclosed save in the following circumstances:

a. where there is a requirement for disclosure for the purposes of managing
potential or actual conflicts;

b. where there is a requirement for disclosure following the change of responsibilities of a member;

c. where there is a requirement for the purposes of disciplinary proceedings;

d. where there is any legal or regulatory obligation to disclose the information.

The disclosures by a member would be scrutinised under the authority of the chairman with due regard to members' areas of responsibility.

The disclosures by chairman would be scrutinised under the authority of the
board with due regard to chairman's responsibility.

The secretary of the board would  keep and maintain custody of documents / records etc pertaining to any disclosure made by members under this code.

SEBI chairman C B Bhave had on his own followed most of the new codes of conduct before assuming the charge as chairman of the board.

Prior to becoming the chairman of SEBI, he was managing director of National Securities Depository (NSDL) against which SEBI has issued an order in IPO scam in 2006. Bhave has disassociated himself when board was discussing the matter related to NSDL.