✓ Background:
- Earlier, the SEBI Board, in its meeting of March 2018 based on the recommendations made by the Kotak Committee, had approved the proposals relating to separation of the role of Chairperson and MD/CEO of listed companies.
- Basis of the above, SEBI (Listing Regulations) were amended in May 2018 mandating, with effect from April 1, 2020, top 500 listed entities to ensure that the Chairperson of the board shall –
a. be a non-executive director;
b. not be related to the Managing Director or the Chief Executive Officer
(as per the definition of the term “relative” defined under the Companies Act, 2013.)
- Thereafter, considering difficulties highlighted by the industry representatives, the deadline for compliance was extended by two years in January 2020. As things stand now, the provision for mandating Separation of the role of Chairperson and MD/CEO of listed companies willbe applicable from April 01, 2022 for top 500 Companies.
- As the revised deadline is less than two months away, on a review of the compliance status it is seen that the compliance level, which stood at 50.4% amongst the top 500 Listed Companies has progressed to only 54% as on December 31, 2021. Hence, expecting the remaining about 46% of the top 500 listed companies to comply with these norms by the target date would be a tall order.
- As a way forward, SEBI Board at this juncture, decided that this provision may not be retained as a mandatory requirement and instead be made applicable to the listed entities on a "Voluntary" basis.
- To read SEBI Press Release, please click here
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