Big relief for listed companies, no need to separate chairman and MD posts, SEBI decides

SEBI Latest News: Voluntary separation of Chairman and Managing Director (MD) positions in listed companies. That is not necessary. On Tuesday, the market regulator SEBI made this clear. Let me inform you that the rules for separation of Chairman and MD posts were supposed to come into effect from April 1, 2022. So far only 54% of the top 500 companies have followed this rule. This rule was introduced to improve corporate governance.

There was opposition

According to the report, the chairman post was to be kept non-executive as per the prescribed rules. At the same time, it was decided that the chairman and MD could not be close relatives. Not only that, there was opposition to enforcing these rules in corporate India. With SEBI’s new announcement, companies will now be able to hold the positions of Chairman and MD separately or together as they wish.

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CMD position in many companies

Currently, many companies have consolidated two positions as CMD (Chairman-cum-Managing Director), resulting in some overlapping of board and management. This can lead to conflict of interest. In light of this, in May 2018, the regulator came up with the criteria to separate this post.

Finance Minister Nirmala Sitharaman replied

The Securities and Exchange Board of India (SEBI) has clarified the issues regarding both the posts in a release after the board meeting. Finance Minister Nirmala Sitharaman had earlier this month said that if Indian companies had any views on the issue, the market regulator should look into it. However, he made it clear that he was not giving any instructions.