The MR Mayya committee on model rules and bye-laws for stock exchanges recommended on Monday that a defaulter should not be re-admitted for a period of five years.

The committee has also recommended globalisation of stock exchanges by paving the way for a non-citizen to become a member of the governing board. This, in effect, would mean that foreign brokerages can become members of the governing board of an exchange by participating in the elections.

At present, a clause prevents the entry of foreign players as non-citizens cannot become members of the governing board.

The current rule permits a defaulter to return to the exchange once the dues are settled. The committee has made stringent recommendations which includes prohibiting a defaulting member from becoming a member of any other exchange for five years.

The panelsuggested that if a broker having multiple membership defaults in one exchange, he should be declared a defaulter in other exchanges too.

Once declared defaulter, the distribution of the assets will go to meet the claims of the stock exchange, the clearing house/corporation, settlement guarantee fund, Sebi, depositories, contractual obligation towards clients and any other liability coming from a government recognised agency.

If there is any surplus left, it would be given back to the member after a period of three years to meet any liability that was likely to arise.

The committee has recommended that the post of a stock exchange president be redesignated as chairman and all the day-to-day operations be left to the executive director.

The president should distance himself from operational matters and intervene only at the level of the governing board meetings. It has suggested that the powers of management and operation of stock exchanges be vested solely with the executive director.

The committeehas suggested that the powers of the general body of stock exchanges be restricted to acquisition/purchase/sale of immovable property exceeding Rs 50 lakh.

The Mayya panel has recommended that the stock exchanges publish the status of the investor funds/trade guarantee funds on half-yearly basis.

To ensure corporate governance, it has suggested that when a board is considering a particular issue, interested members should not participate in the proceedings of the meeting. Besides, a selection committee of the exchange should decide the selection of new members.