Sebi makes provision of separation of chairperson & MD/CEO roles voluntary

Securities and Exchange Board of India (Sebi) board on Tuesday has decided to make provision for separation of the roles of chairperson and MD/CEO as 'voluntary' against 'mandatory' earlier.

The market regulator had in June 2017 set up a committee on corporate governance under Uday Kotak with a view to seek recommendations to further enhance corporate governance norms for listed companies.

One of the recommendations that the Committee came out with was the separation of the roles of chairperson and MD/CEO of listed companies. This was proposed to provide a better and more balanced governance structure by enabling more effective and objective supervision of the management.

The Sebi board, in its meeting in March 2018 approved the proposal for the top 500-listed entities. Later 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 will be 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 per cent amongst the top 500 listed companies as on September 2019, has progressed to only 54 per cent as on December 31, 2021," Sebi said.

Sebi said it received representations from industry bodies and corporates expressing various compelling reasons, difficulties and challenges for not being able to comply with this regulatory mandate.