SEBI notifies stricter norms for appointments of MD at listed cost
- ByStartupStory | January 27, 2022
“The appointment or a re- appointment of a person, comprising a managing director (MD) or a whole Time director (WTD) or a Manager, who was previously rejected by the shareholders, “ SEBI said in a notification on Monday.
Putting in place stringent norms, SEBI has said that a person rejected by share holders at a general meeting can be appointed or re- appointed as a administrator or whole time director or manger, only after providing detailed justifications and ensuring compliance with various conditions.
Considerably, the appointment or re- appointment of such a person earlier rejected by the shareholders, there should be a detailed explanation and excuses by the company’s nomination and remuneration committee and the board of directors for recommending the person.
As per the companies Act, 2013, the board cannot appoint a person who droops to get chosen as a director at a generic meeting as an another director.
Notwithstanding, this does not implicitly precludes, the board from re- appointing a person as an MD or WTD, whose appointment to such posts were rejected by the shareholders at the general meeting.
Furthermore, the board of a listed entity can cease to appoint such persons as WTD or MD even after subsequent rejections by the shareholders.
Experts believe that such appointments by the boards are against the will of the share holders, who are entrusted by the law to approbate the appointment of directors to the boards of companies, and also against the spirit of corporate governance.
SEBI has ameliorated the listing of obligations and disclosure Requirements (LODR) Regulations with respect to the appointments.
However , the securities and Exchange board of India (SEBI) has amended the rules pertaining to credit rating agencies.
Follow Startup Story
Related Posts
