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 common 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 stated on Friday.
The proposal is aimed toward guaranteeing shareholder supremacy on the appointment of such positions.
The regulator, by the session paper, had proposed that an individual rejected by a listed firm’s shareholders as a managing director or whole-time director may be appointed or re-appointed to the submit solely after the corporate fulfils numerous 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.
Below 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 happy, Sebi had stated within the session paper.
The situations embrace 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 receive shareholders’ approval for such appointments within the instant subsequent common 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 stated.
As per the Corporations Act, the board can not appoint an individual who fails to get elected as a director at a common 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 common assembly.