Sebi eases governance norms, extends woman director deadline
Mumbai: To ease process of implementing stronger corporate governance norms by listed firms, regulator Sebi today relaxed various provisions of the new law, especially for smaller companies, and extended the deadline for appointing at least one woman director to April 1, 2015.
Changes have been made to the new regulatory regime, which would come into effect from next month, following numerous representations received by the regulator with regard to these regulations that would vastly change the way listed companies function and are regulated in the country.
While amendments have been made to various provisions of this Corporate Governance Code to align them with the relevant sections of the new Companies Act, the deadline would remain unchanged at October 1, 2014, except for requirement of a minimum one woman director on the boards of listed companies.
The listed companies would have time till April 1 next year to comply with the woman director-related provision.
Sebi has also exempted smaller companies — those having equity share capital of up to Rs 10 crore and networth not exceeding Rs 25 crore, as also listed on SME platforms of the stock exchanges — from the mandatory compliance to the new Code “for the time being”.
Among others, the proposed regulations related to tenure of independent directors, as also the definition and exemption from mandatory prior approval for certain related party transactions, have also been amended to align them with the Companies Act.
Announcing the changes, Sebi said it has “received representations from market participants including companies and industry associations, highlighting certain practical difficulties in ensuring compliance, seeking clarifications on interpretation of certain provisions and suggesting various options to ease the process of implementation.”
These issues were examined and discussed in the Primary Market Advisory Committee of Sebi and “in order to address the above mentioned concerns and facilitate the listed companies to ensure compliance with the provisions of the revised Clause 49 (which deals with the Corporate Governance norms at listed companies), it has been decided to make certain amendments to Clause 49,” the regulator said.
The new corporate governance norms were proposed after detailed discussions by Sebi and with concerned stakeholders for over a year and had prescribed stronger regulations for listed companies than those prescribed under the Companies Act for general classes of companies.
Since implementation of the new Companies Act with effect from April 1, 2014, the Ministry of Corporate Affairs has issued various circulars on matters related to Corporate Governance clarifying certain provisions of the new law.
These include clarification on rules relating to appointment and qualification of directors and independent directors, matters relating to related party transactions, and the rules governing meetings of board and its powers.
These amendments and clarifications have been taken into account by Sebi also to make necessary changes in the new norms. Besides, Sebi had also sought earlier this year the status of preparedness of top 500 listed companies by market capitalization for ensuring timely compliance with the new corporate governance norms.