January 09, 2020

SEBI May Extend Deadline To Split Chairman, MD Posts

[ By Bobby Anthony ]


The Securities and Exchange Board of India (SEBI) is likely to relax the March 31, 2020 deadline for publicly listed companies to separate the post of chairman and managing director (MD) by an year, after large scale objections by companies which raised the issue with the Prime Minister.

Incidentally, around half of the top 500 publicly-listed companies are yet to conform to SEBI's suggestion to split these posts which was first announced in May 2018.

The proposal to split the post of chairman and MD was first mooted by a SEBI panel headed by eminent banker Uday Kotak in order to carry out a major overhaul of corporate governance norms for listed companies.

Later, SEBI suggested splitting the posts of chairman and MD in an amendment to its ‘Listing Obligations and Disclosure Requirements’ in line with the Uday Kotak committee's proposal.

The Uday Kotak committee had suggested that only the non-executive director should be allowed to be made chairman, which would eventually lead to a split in the posts of chairman and MD.

Such a separation of posts was suggested in order to help segregate roles between the chairman (of the board) who takes care of the overall strategy, and managing director, who is responsible for the day-to-day functioning of the management.

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