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Sebi Makes Provision Of Separation of Chairperson And MD/CEO Roles Voluntary

The Uday Kotak Committee, setup in June 2017 had recommended the separation of the roles of chairperson and MD/CEO of listed companies

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The Securities and Exchange Board of India (Sebi) on Tuesday decided to make provision for separation of the roles of chairperson and MD/CEO as 'voluntary' against 'mandatory' earlier. 

Sebi had set up a committee in June 2017 on corporate governance under Uday Kotak to seek recommendations on further enhancing the corporate governance norms for listed companies.

One of the recommendations that the Committee came out with was the separation of the roles of chairperson and MD/CEO of listed companies.

This was proposed to provide a more balanced governance structure by enabling more effective and objective supervision of the management.

The Sebi board, March 2018 had approved the proposal for top 500-listed entities. Later the deadline for compliance was extended by two years in January 2020.

 “As the revised deadline is less than two months away, on a review of the compliance status it is seen that the compliance level,which stood at 50.4 per cent amongst the top 500 listed Companies as on September 2019, has progressed to only 54 per cent as on December 31, 2021," Sebi said. 

"Existing corporate governance framework is very strong and day by day enforcement is also becoming stronger.  Hence, separation of MD and Chairman position was not a very burning issue. Making it voluntary reflects that the Government is reciprocating to changes suggested by Industry," says Makarand Joshi, founding partner, MMJC and Associates.

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