- Securities and Exchange Board of India (Sebi) has announced to make provision for separation of the roles of chairperson and MD/CEO as ‘voluntary’ against ‘mandatory’ earlier.
- In 2017 SEBI had formed a Committee on Corporate Governance under the chairmanship of Shri Uday Kotak. One of the recommendations of this committee was:
- Listed entities with more than 40% public shareholding should separate the roles of Chairperson and MD/CEO with effect from April 1, 2020. After 2020, SEBI may examine extending the requirement to all listed entities with effect from April 1, 2022.
- i.e. companies that are listed on the stock exchange should have a separate Chairperson and separate MD/CEO.
- As per the latest decision from SEBI, the top 500 listed companies had to keep a separate Chairperson and MD/CEO role with effect from April 01, 2022. Now with less than 2 months for this deadline, SEBI has revised its guidelines and changed this instruction from mandatory to voluntary.
- i.e If a company wants it can keep the role of Chairperson and MD/CEO separate. i.e. now it is their voluntary decision. Earlier this was to be followed mandatorily.
Points to remember:
- Who was the head of the committee formed by SEBI in 2017 “Committee on Corporate Governance”?- Uday Kotak
Source: Economic times