SEBI defers deadline by two years to split roles of chairman, MD on demand from corporates, economic slowdown

Markets regulator SEBI has deferred by two years to April 2022 its directive for listed companies to split the roles of chairman and managing director in view of demand from corporates, and to keep compliance burden lower in wake of the current economic scenario.

Under the Sebi norms, the top 500 listed entities by market capitalisation were mandated to comply with the requirement of separation of the roles of chairperson and managing director (MD) or chief executive officer (CEO) with effect from 1 April 2020.

The norms were aimed at improving corporate governance structure of listed companies.

Now, the date of implementation of the regulatory provision has been deferred to 1 April 2022, according to a gazette notification dated 10 January.

While the notice did not specify any reason for the move, sources said that the decision to defer the implementation has been taken in view of demand from corporates and also to ease the compliance burden amid a slowing economic growth rate.

Securities and Exchange Board of India (Sebi) has been receiving various representations with respect to the regulatory requirements including from industry bodies like FICCI and CII.

The representations highlighted the present levels of unpreparedness of listed entities to comply with the directive. Data from stock exchanges reveal that presently, only around 50 percent of the top 500 listed entities are in compliance with the regulatory provision.

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