Reliance Industries, Infosys, TCS and Bharti Airtel are among the 291 listed companies that will have to appoint a non-executive chairperson on their boards by April 1, 2020 to comply with regulator Sebi's directive and most of these firms will need to split the roles of chairman and managing director for compliance, PTI has reported. These norms are part of the series of recommendations given by the Sebi-appointed Kotak committee on corporate governance.
A total of 291 companies (or 58.2 per cent) out of top 500 NSE listed entities by market capitalisation will have to appoint non-executive chairpersons, including by splitting the CEO/MD and chairperson position, according to data provided by Prime Database based on information available till July 18. Besides, 335 firms (33.5 per cent) out of top 1,000 NSE listed entities by market capitalisation would require to have one woman independent director by April 1, 2020.
It may be recalled that Securities and Exchange Board of India had at its 28 March 2018 board meeting accepted most of the recommendations of the Kotak Committee report on ways of improving corporate governance in the listed Indian companies. The Kotak Committee (Committee) had submitted the Report proposing amendments to the SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015 (LODR) with the objective of enhancing fairness and transparency in the corporate governance landscape in India. Listed companies need to have at least six directors on board. The Committee has proposed that at least 50% of the board should comprise independent directors (IDs). Individuals from the promoter group cannot become IDs.
There should be at least one woman ID. It is recommended that the board should list the competencies/expertise that it believes its directors should possess, and the ones the directors possess, in the annual report. Sebi also requires reduction in the limit of maximum number of directorships (including alternate directorships) to 8 listed companies (of which independent directorships shall not exceed 7) by 1 April 2019 and no more than 7 listed companies by 1 April 2020. Also, payments made by listed companies to related parties with respect to brands usage/royalty which exceeds 2% of annual consolidated turnover, should have prior approval of shareholders.