Markets regulator Sebi on Friday prolonged to February 26 the final date for submission of public feedback on a proposal concerning appointment of managing administrators and complete time administrators.
The regulator had on January 27 floated a session paper on introduction of provisions referring to appointment / re-appointment of individuals who fail to get elected as whole-time administrators/managing administrators on the normal assembly of a listed entity.
It had sought feedback by February 12, 2021.
Nevertheless, “it has been determined to increase the timeline for submission of feedback to February 26, 2021,” Sebi mentioned on Friday.
The proposal is geared toward making certain shareholder supremacy on the appointment of such positions.
The regulator, via the session paper, had proposed that an individual rejected by a listed firm’s shareholders as a managing director or whole-time director could be appointed or re-appointed to the submit solely after the corporate fulfils varied situations, together with offering detailed justifications.
In case the corporate’s shareholders reject the candidature of the individuals once more, such individuals can’t be thought-about for appointment as director or proceed as a director for 2 years.
Beneath the proposal, if an individual whose appointment or re-appointment as a managing director (MD) or whole-time director (WTD) has been rejected by the shareholders of a listed agency, they shouldn’t be appointed once more on such submit until sure situations are glad, Sebi had mentioned within the session paper.
The situations embody the corporate’s nomination and remuneration committee recommending such appointment with detailed justification regardless of rejection by shareholders and the board approving the appointment after recording causes.
After the appointment of such administrators, a listed firm ought to disclose causes for naming such individuals to the board to inventory exchanges inside 24 hours, together with the suggestions of the nomination and remuneration committee.
Amongst different situations, a listed entity ought to get hold of shareholders’ approval for such appointments within the speedy subsequent normal assembly or inside three months, whichever is earlier.
In case, the shareholders reject the candidature of the individuals once more, such individuals can’t be thought-about for appointment as director, or proceed as a director of that specific listed entity for a interval of two years from the date of rejection by the shareholders, Sebi had mentioned.
As per the Firms Act, the board can not appoint an individual who fails to get elected as a director at a normal assembly as an extra director.
Nevertheless, this doesn’t explicitly prohibit the board from re-appointing an individual as an MD or WTD, whose appointment to such posts was rejected by the shareholders on the normal assembly.