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SEBI changes requirement for separation of chairperson and MD, CEO roles voluntary Corporate Governance

SEBI changes requirement for separation of chairperson and MD, CEO roles voluntary

India Blooms News Service | @indiablooms | 16 Feb 2022, 02:33 am

Mumbai/IBNS: It will be no longer mandatory for listed companies to separate posts of chairperson and managing director (MD) or chief executive officer (CEO), market regulator Securities and Exchange Board of India (SEBI) on Tuesday decided in a meeting.

The changed rule will now fully come into force from April 1, 2022 after several delays.

According to a rule passed by SEBI in 2018, the top 500 listed companies by market capitalisation had to mandatorily separate the role of the chairperson and MD/CEO from April this year following the two-year extension given by the capital market regulator in January 2020.

With the new rule SEBI intended to implement global best practices in terms of corporate governance and to prevent the concentration of power in the hands of one individual in the company.

"SEBI continues to receive representations from industry bodies and corporates expressing various compelling reasons, difficulties and challenges for not being able to comply with this regulatory mandate," SEBI said.

SEBI had mandated the seperation of the chairperson and MD/CEO roles following the recommendation of Uday Kotak-led panel on corporate governance in 2017 to separate the two roles to create a more balanced governance structure for effective and objective supervision of the management.

 

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