Kotak-led panel wants MD, CEO roles split; 6 independent directors on board
ETMarkets.com|
Updated: Oct 05, 2017, 05.34 PM IST
NEW DELHI: A Uday Kotak-led panel on Thursday submitted its report on corporate governance, suggesting a host of changes for transparency in appointing independent directors and to ensure their active role in company management.
The report said it was the right time to split the roles of chairman and managing director in listed companies.
It suggested the maximum number of listed entity directorship to be reduced to eight and that at least half of the board of every listed entity should be independent directors.
For this, the report prescribed a minimum of six directors on the board of listed entities. Every listed entity must have at least one independent woman director, it said.
The Kotak-led committee called for new disclosure norms, where listed entities have to give detailed reasons for resignation of independent directors.
The panel also recommended that the top 100 companies by market capitalisation should webcast their shareholder meeting. It further added that non-executive director can't continue beyond 75 years of age without proper resolution.
Listed companies must have cash flow statement every 6 months and disclosure of quarterly consolidated earnings should be mandatory.
Sebi has sought comments from the public on the panel’s suggestions till November 4, 2017.
Markets regulator Sebi had formed the 24-member group in June that consisted of representatives of Corporate India, stock exchanges, professional bodies, investor groups, chambers of commerce, law firms, academicians and research professionals and Sebi officials.
The panel on Thursday suggested to make it mandatory for top 500 companies (in terms of market capitalisation) to undertake D&O (directors and officers) insurance for its independent directors.
The board of directors must be updated on regulatory & compliance changes at least once a year , the panel suggested. The panel seeks more transparency on the appointment of independent directors, as it wants them to play a more active role on the board.
The panel suggests listed entities to list out competencies of every director on the board. Company boards must discuss succession planning and risk management at least once a year, the panel said.
“Disclosure and transparency underpin good governance and the efficient functioning of the markets. A corporate governance framework should ensure that timely and accurate disclosure is made on all material matters regarding the corporation, including the financial situation, business performance, strategic shifts, ownership, and governance of the company,” the report of the committee on corporate governance said.
The Committee is of the opinion that an updated list of all credit ratings obtained by the listed entity be made available at one place, which would be very helpful for investors and other stakeholders. At present, listed entities are required to disclose the changes in credit rating for different instruments from time to time to the stock exchanges as and when changes happen.
The report said it was the right time to split the roles of chairman and managing director in listed companies.
It suggested the maximum number of listed entity directorship to be reduced to eight and that at least half of the board of every listed entity should be independent directors.
For this, the report prescribed a minimum of six directors on the board of listed entities. Every listed entity must have at least one independent woman director, it said.
The Kotak-led committee called for new disclosure norms, where listed entities have to give detailed reasons for resignation of independent directors.
The panel also recommended that the top 100 companies by market capitalisation should webcast their shareholder meeting. It further added that non-executive director can't continue beyond 75 years of age without proper resolution.
Listed companies must have cash flow statement every 6 months and disclosure of quarterly consolidated earnings should be mandatory.
Sebi has sought comments from the public on the panel’s suggestions till November 4, 2017.
Markets regulator Sebi had formed the 24-member group in June that consisted of representatives of Corporate India, stock exchanges, professional bodies, investor groups, chambers of commerce, law firms, academicians and research professionals and Sebi officials.
The panel on Thursday suggested to make it mandatory for top 500 companies (in terms of market capitalisation) to undertake D&O (directors and officers) insurance for its independent directors.
The board of directors must be updated on regulatory & compliance changes at least once a year , the panel suggested. The panel seeks more transparency on the appointment of independent directors, as it wants them to play a more active role on the board.
The panel suggests listed entities to list out competencies of every director on the board. Company boards must discuss succession planning and risk management at least once a year, the panel said.
“Disclosure and transparency underpin good governance and the efficient functioning of the markets. A corporate governance framework should ensure that timely and accurate disclosure is made on all material matters regarding the corporation, including the financial situation, business performance, strategic shifts, ownership, and governance of the company,” the report of the committee on corporate governance said.
The Committee is of the opinion that an updated list of all credit ratings obtained by the listed entity be made available at one place, which would be very helpful for investors and other stakeholders. At present, listed entities are required to disclose the changes in credit rating for different instruments from time to time to the stock exchanges as and when changes happen.
