The recommendations on corporate governance assume significance in light of boardroom battles at major companies such as Tata Sons and Infosys.
Uday Kotak-led SEBI committee on corporate governance has submitted its report today. The committee has recommended splitting of roles of Chairman and MD-CEO for listed companies.
It has also suggested that independent directors should make up at least half of every company’s board and should attend at least half of board meets. A minimum of 6 independent directors, including at least one woman director, should be appointed on the board of a listed company. A formal induction is mandatory for every new independent director (IDs).
Moneycontrol had earlier reported the discussions in the committee meet.
“To improve governance, it is recommended that every listed entity, irrespective of whether the Chairperson is executive or non-executive, may be required to have at least half its total number of directors as IDs,” says the report.
Besides, the panel headed by eminent banker Uday Kotak also suggested a minimum remuneration of Rs 5 lakh for independent directors per annum and a sitting fee of Rs 20,000-50,000 for each board meet.
It also sought to make it mandatory to seek public shareholders' approval for annual remuneration of executive directors from promoter family if the amount exceeds Rs 5 crore or 2.5 per cent of the company's net profit.
In case of more than one such director, the same condition would apply for aggregate annual remuneration exceeding 5 per cent of the net profit.
As per the report, board of directors need to be updated on Regulatory & Compliance changes at least once a year.
The committee has recommended that a person should be able to hold the position of director, including any alternate dictatorship, in maximum of eight listed companies with effect from April 1, 2019 and reduce that number further to seven by April 1, 2020.
It also suggests that top 100 companies by market capitalisation must webcast their shareholder meetings.
The markets regulator has sought public comments on the report by November 4.(With inputs from PTI)