The board of Securities of Exchange Board of India (Sebi) in its meeting on Tuesday decided to make splitting of post of chairman and managing director voluntary rather than mandatory.
Sebi revised its earlier stance basis the low level of compliance by listed entities.
The regulator has mandated that the two roles be separated from 1 April 2022 – after a two-year extension to the initial roll-out date. People holding the two posts cannot be related to each other.
Presently half of the Nifty 500 companies were left to comply with this norm.
“There has been barely a 4% incremental improvement in compliance by the top 500 listed companies over the last two years, hence, 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,” Sebi said in the press statement.
Sebi had proposed this splitting as the separation of powers of the Chairperson and MD/CEO may provide a better and more balanced governance structure by enabling more effective and objective supervision of the management.
In past couple of month industry bodies including CII had written to the regulator to rethink the provision.
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