New Delhi: In an effort to strengthen corporate governance among listed companies, SEBI on Tuesday approved various amendments to the rules governing the appointment, reappointment and removal of independent directors, including disclosure of resignation letters of such persons. requirement is also included.
There will be a cooling period of one year for an independent director to transition into a whole-time director in the same company/holding/subsidiary/associate company or any company belonging to the promoter group.
As part of a review of regulatory provisions relating to independent directors, SEBI Board The SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 have approved amendments.
The appointment, reappointment and removal of independent directors should be done only through a special resolution passed by the shareholders. This will be applicable to all listed entities.
In addition, the process to be followed by the Nomination and Remuneration Committee (NRC) while selecting the candidates for appointment as independent directors has been made more transparent. These include disclosures about the skills required for appointment as an independent director and how the proposed candidate fits into that skill, Sebi said in a release.
The composition of the NRC has been revised to include 2/3 independent directors instead of the current requirement of most independent directors.
“Stakeholders’ approval for appointment of all directors, including independent directors, shall be taken at the next general meeting or within three months of appointment to the board, whichever is earlier,” the release said.
In terms of eligibility criteria for appointment as an independent director, the regulator said there will be a cooling-off period of three years for key managerial personnel and their relatives or employees of promoter group companies.
“The relatives of the employees of the company, its holding, subsidiary or associate company have been permitted to become independent directors, without the requirement of cooling-off period. companies Act, 2013,” the release said.
When an independent director resigns from the board of a listed company, SEBI said that the entire resignation letter of the individual should be disclosed along with the list of his/her current directors and membership in the board committees.
Among other things, at least 2/3 of the members of an audit committee must be independent directors and all related party transactions must be approved by the committee’s independent directors only.
“The requirement of insurance of directors and officers has been increased to the top 1,000 companies (by market capitalisation),” SEBI said.
These amendments will come into effect from January 1, 2022.
The SEBI board also agreed to make a reference to the Ministry of Corporate Affairs to “give more flexibility to companies while fixing remuneration for all directors (including independent directors), including profit linked commission, meeting fee, ESOP, etc. the overall prescribed limit specified under the Companies Act, 2013”, the release said.
There will be a cooling period of one year for an independent director to transition into a whole-time director in the same company/holding/subsidiary/associate company or any company belonging to the promoter group.
As part of a review of regulatory provisions relating to independent directors, SEBI Board The SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 have approved amendments.
The appointment, reappointment and removal of independent directors should be done only through a special resolution passed by the shareholders. This will be applicable to all listed entities.
In addition, the process to be followed by the Nomination and Remuneration Committee (NRC) while selecting the candidates for appointment as independent directors has been made more transparent. These include disclosures about the skills required for appointment as an independent director and how the proposed candidate fits into that skill, Sebi said in a release.
The composition of the NRC has been revised to include 2/3 independent directors instead of the current requirement of most independent directors.
“Stakeholders’ approval for appointment of all directors, including independent directors, shall be taken at the next general meeting or within three months of appointment to the board, whichever is earlier,” the release said.
In terms of eligibility criteria for appointment as an independent director, the regulator said there will be a cooling-off period of three years for key managerial personnel and their relatives or employees of promoter group companies.
“The relatives of the employees of the company, its holding, subsidiary or associate company have been permitted to become independent directors, without the requirement of cooling-off period. companies Act, 2013,” the release said.
When an independent director resigns from the board of a listed company, SEBI said that the entire resignation letter of the individual should be disclosed along with the list of his/her current directors and membership in the board committees.
Among other things, at least 2/3 of the members of an audit committee must be independent directors and all related party transactions must be approved by the committee’s independent directors only.
“The requirement of insurance of directors and officers has been increased to the top 1,000 companies (by market capitalisation),” SEBI said.
These amendments will come into effect from January 1, 2022.
The SEBI board also agreed to make a reference to the Ministry of Corporate Affairs to “give more flexibility to companies while fixing remuneration for all directors (including independent directors), including profit linked commission, meeting fee, ESOP, etc. the overall prescribed limit specified under the Companies Act, 2013”, the release said.
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