The Securities and Exchange Board of India (SEBI) has once again gone soft on the matter of separating the role of chairperson with that of the managing director & chief executive officer (MD & CEO) of a listed entity, especially the biggest 500 companies by market capitalisation.
The board of the capital market regulator, which met in New Delhi today, decided that the requirement, which was to come into effect from April 1 for the top 500 listed companies, will only be applicable on a "voluntary basis".
The watchdog cited factors like constraints due to the pandemic and rather low level of compliance till date - the decision was first approved in March 2018 - as reasons for the latest decision.
"Considering rather unsatisfactory level of compliance achieved so far, with respect to this corporate governance reform, various representations received, constraints posed by the prevailing pandemic situation and with a view to enabling the companies to plan for a smoother transition, as a way forward, SEBI Board at this juncture, decided that this provision may not be retained as a mandatory requirement and instead be made applicable to the listed entities on a "voluntary basis"," said a statement by SEBI.
Interestingly, the decision taken in March 2018 was scheduled to come into effect in January 2020 when it was extended by two years and April 1, 2022 was announced as the new deadline.
The watchdog further highlighted the fact that 50.54 per cent of the top 500 companies had complied with the segregation norm by September 2019 with the compliance level rising to 54 per cent till December 2021.
"Thus, there has been barely a 4 per cent incremental improvement in compliance by the top 500 listed companies over the last two years, hence, expecting the remaining about 46 per cent of the top 500 listed companies to comply with these norms by the target date would be a tall order," stated the SEBI release.
Among other things, the board of the capital market regulator approved amendments in the regulatory framework for Alternative Investment Funds (AIFs) to provide flexibility to Category 3 AIFs to calculate the investment concentration norm either on investable funds or net asset value of the fund while investing in listed equity of an investee company.
The regulator has also tweaked certain other laws to align the regulatory framework for 'security cover', disclosure of credit ratings and due diligence certificate.
FM interacts with SEBI board
On a different note, finance minister Nirmala Sitharaman met SEBI board members and other senior officials of the regulatory body in New Delhi today. SEBI chairman Ajay Tyagi briefed the finance minister about major trends and outlook of the Indian securities market and also apprised her the status of capital market related proposals announced in the Union Budget last year.
"Hon'ble Finance Minister, in her address, while appreciating the initiatives taken by SEBI emphasised the need for the regulator to take further steps to reduce compliance burden, reduce cost of market intermediation, take more investor protection measures, further develop the corporate bond market, develop green bond market in the context of increasing focus on ESG investment, initiate next generation of reforms to improve ease of doing business and be prepared for the possible market turbulence on account of US Fed actions," said SEBI.
Copyright©2023 Living Media India Limited. For reprint rights: Syndications Today