India's securities and exchange board of India (Sebi) board has taken a number of key decisions, including separating the posts of managing director, chief executive officer and chairman. The decision has made it mandatory for listed companies to disclose reasons for the resignation of auditors and fees paid to them, and reducing the number of companies in which a person could be director to 8 from 10. After accepting the recommendations made by the Uday Kotak panel on corporate governance, the agency also directed the top 1,000 listed companies to have minimum six directors. It asked the top 100 listed companies to webcast annual general meetings. The Sebi board also cut costs for some mutual fund schemes.
Industry professionals said the decision to separate the posts would lead to stricter scrutiny of the management by its board. Several companies currently, have merged the two posts and chairman-cum-MD, leading to some overlapping of the board and the management. The new recommendation will come into effect from April l1, 2020 for top 500 listed entities. The Sebi board said all listed companies will have to disclose the expertise of its directors and should have at least one independent woman director. Sebi chairman Ajay Tyagi said that while a large number of recommendations by the committee were accepted, some have been referred to government agencies and other regulators.
“The board decided to refer certain recommendations to various agencies, considering that the matters involved relate to them. Such recommendations, inter alia, include strengthening the role of ICAI, internal financial controls, adoption of Ind-AS, treasury stock, governance aspects of PSEs, etc,” a release from the regulator said. Tyagi said out of 80 recommendations, the board accepted 40 without modification, 15 with some modifications, while eight have been referred to government agencies and other departments. He added that in the derivatives market, a framework has been approved that will take care of product suitability for every retail investor who trades in the derivative market.
