Question

Under the SEBI Act, 1992, read with the SEBI (Procedure for Board Meetings) Regulations , if a member of the Board is a Director of a company whose "Draft Red Herring Prospectus" (DRH

Q: Answer-Under the SEBI Act, 1992, read with the SEBI (Procedure for Board Meetings) Regulations, if a member...

Explanation This scenario is governed by Section 7A of the SEBI Act inserted via the 2002 Amendment. It codifies the principle of Nemo judex in causa sua no one should be a judge in their own cause. The law is absolute once a pecuniary interest direct or indirect is identified, the member is legally barred from both deliberation and the decision-making process. Unlike some corporate board rules where disclosure and participation might be permitted, SEBIs statutory mandate requires total recusal for that specific agenda item to preserve regulatory integrity.

P is being considered for an investigation order during a Board meeting, which of the following is the correct legal procedure?

A The member must resign from the Board immediately to maintain the "Fit and Proper" status of SEBI.

B The member may participate in the deliberation but must abstain from the final vote under Section 7A.

C The member must disclose the nature of their interest and shall not take part in any deliberation or decision of the Board with respect to that matter.

D The Chairman has the discretionary power to allow the member to vote if the member’s interest is less than 2% of the company's paid-up capital.

E The entire proceeding of the Board becomes voidable at the option of the Central Government if the member was present in the room, regardless of participation.

Practice Next

Under the SEBI Act, 1992, read with the SEBI (Procedure for Board Meetings) Regulations , if a member of the Board is a Director of a company whose "Draft Red Herring Prospectus" (DRH

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