From April 2020 the top 500 companies in India have to split the posts of chairman and MD/CEO as recently mandated by capital markets regulator SEBI. PRIME Database, in an analysis of 1,670 companies, found that 640 of them had the same person serving as Chairman and MD/CEO. Family-owned businesses have a more serious problem with 'the family' calling the shots even when the firms employ professionals as CEOs/MDs, experts say.
Although these new guidelines are a step forward, sceptics think that actual implementation is likely to be cosmetic. It now boils down to how much freedom or power will be granted to the new CEO/MD. And what is there to prevent family members from assuming the roles of both chairman and MD/CEO or calling the shots from outside the boardroom?