New Delhi, Feb 15 (FN Bureau) Industry bodies CII and Ficci have welcomed market regulator Securities and Exchange Board of India (SEBI)’s decision to make it voluntary for listed companies to split the posts of Chairperson and MD & CEO instead of mandatory as decided earlier. “CII welcomes the decision of SEBI on separation of the offices of Chairperson and MD/CEO to be made applicable to listed entities on a “voluntary basis” and not a mandatory requirement,” said CII Director General Chandrajit Banerjee.
The industry body had submitted that the amendment with regard to separation of roles of Non-Executive Chairperson and MD/CEO could lead to over-regulation and act as an impediment to a conducive business environment. “The provision that Chairman and MD/CEO should not be related, could be onerous and may not be required, especially in the light of sufficient checks and balances present in the existing regulations to counter any potential ill-effects of such a situation. The decision may be left to the discretion of Boards and to the will of shareholders and it is important that Indian entrepreneurs are not placed at a disadvantage by imposing such requirements” Banerjee had maintained. In its Board meeting on Tuesday, the market regulator eased the requirement on CMD post in the face of unsatisfactory level of compliance and representations received from industry.
A status review by the market regulator found that compliance level which stood at 50.4 per cent amongst the top 500 listed companies as on September 2019 progressed to only 54 per cent as on December 31, 2021. “Thus there has been barely a 4 per cent incremental improvement in compliance by the top 500 listed companies over the last two years, hence, expecting the remaining about 46 per cent of the top 500 listed companies to comply with these norms by the target date would be a tall order,” SEBI said while taking the decision on the issue. Welcoming SEBI Board’s decision, Ficci said that leadership arrangements that would drive business excellence should be best left to the judgement of the shareholders. “Indian companies take pride in their superior governance practices and are constantly raising the bar. The Indian Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations have continuously evolved over the past years and kept pace with global practices in many respects, propelling Indian governance standards amongst the world’s best,” said Arun Chawla, Director General, FICCI.