SEBI Makes It Voluntary For Listed Companies To Separate Roles Of Chairperson, MD

The listed entities were required to split the roles before April 2022.

New Delhi: Capital markets regulator Securities and Exchange Board of India (SEBI) on Tuesday said the requirement to split Chairperson and Managing Director or Chief Executive Officer positions at 500 listed companies will not be mandatory and will be implemented on a voluntary basis. The listed entities were required to split the roles before April 2022.

“SEBI board at this juncture decided that this provision may not be retained as a mandatory requirement and instead be made applicable to the listed entities on a ‘voluntary basis’,” the said an official release.

The market regulator said the decision was taken after considering the “unsatisfactory level” of compliance achieved so far. “Considering rather unsatisfactory level of compliance achieved so far, with respect to this corporate governance reform, various representations received, constraints posed by the prevailing pandemic situation and with a view to enabling the companies to plan for a smoother transition, as a way forward, SEBI Board at this juncture, decided that this provision may not be retained as a mandatory requirement and instead be made applicable to the listed entities on a voluntary basis,” said the release.

Earlier this month, Finance Minister Nirmala Sitharaman had said the regulator should hear if Indian companies have a view on the matter even as she made it clear that she was not “giving a diktat”.

SEBI further said that, with the revised deadline less than two months away, it found that the compliance status which stood at 50.4% amongst the top 500 listed companies as on September 2019, has progressed to only 54% as at the end of December 2021.

Expecting the remaining about 46% of the top 500 listed companies to comply with these norms by the target date would be a tall order, it added.

(With PTI inputs)