New Delhi. Capital markets regulator SEBI has reversed its decision to separate the posts of Chairperson and Managing Director (MD)/Chief Executive Officer (CEO) in listed companies. Now it will not be necessary to separate the posts of Chairperson and MD/CEO. It will be implemented on a voluntary basis. Earlier, the Securities and Exchange Board of India (SEBI) had made it mandatory for the top-500 listed companies to separate these posts from April 1, 2022, in a previous order.
The regulator said after the meeting of the board of directors that its board has decided that the provision for separation of the posts of chairperson and MD/CEO for listed companies will be voluntary rather than mandatory. Companies can now hold the post of Chairperson and MD/CEO separately or together as per their requirement.
read this also- LIC IPO: Before investing in the biggest IPO, keep these risks in mind, otherwise there will be a big loss, know full details
The decision came after the statement of the Finance Minister
This decision of SEBI has come after the statement of Finance Minister Nirmala Sitharaman. He had said earlier this month that if Indian companies have any views on the matter, then the regulator should look into it. However, she made it clear that she was not giving any instructions. SEBI cited the reason behind the latest decision as not satisfactory compliance so far.
Also read- Scary news: Veteran investor said- Indian market may fall further by 10 percent
was given an additional time of two years
SEBI said considering the reports of the industry, an additional time of two years was given for compliance. The regulator said that this provision was related to the improvement in the operating level of the company. But considering the things like compliance not found satisfactory till now, receipt of various reports, constraints due to the current pandemic and giving opportunity to companies to change in a smooth manner, it has been decided that there is a provision for segregation of posts for listed entities. Will be voluntary instead of compulsory.
Not much improvement in compliance level
According to SEBI, the compliance level among the top 500 listed companies was 50.4 per cent as of September 2019, which reached 54 per cent as of December 31, 2021. This rule is based on the recommendations of the committee headed by Uday Kotak appointed by SEBI on company governance. The SEBI Board of Directors also approved amendments to Alternative Investment Funds and decided to harmonize the regulatory framework for ‘protection cover’, disclosure of credit ratings and scrutinized certificates.
Read Article in हिन्दी