To avoid one person getting unfettered powers of management, SEBI's feels separation of the post of chairman, MD or CEO should be implemented by companies as a good governance practice
Market watchdog Securities and Exchange Board of India (SEBI) wants listed companies to voluntarily consider separating the posts of chairman, managing director and chief executive (CEO) as a good governance practice as it feels making it mandatory may not be feasible yet.
SEBI has expressed its views in the new corporate governance code, which listed companies need to implement by 1st October. The code was cleared by the regulator's board and is being finalised for necessary notifications.
There have been suggestions that companies should have different persons for the roles of chairman and managing director (or chief executive officer) to avoid one person getting unfettered powers of management.
The requirement to segregate the roles is common in developed countries such as the US, the UK and France.
SEBI had sought feedback in its consultation paper on new corporate governance norms on the need to separate the positions of chairman and MD.
The new Companies Act provides for such a separation unless the articles of a company provide otherwise or a company does not have multiple businesses.
While a majority of the comments received in response to the consultative paper favoured mandatory separation of the posts, SEBI's Primary Market Advisory Committee (PMAC) recommended that separate posts not be mandated.
Agreeing with the PMAC recommendation, the regulator proposed that separate posts for the chairman and MD/CEO may not be mandated considering the extant provisions that mandate a higher number of independent directors if there is an executive chairman.
"However, it is proposed that the separation of the post of chairman and MD or CEO may be implemented by companies as a good governance practice," SEBI concluded.
On a PMAC recommendation to have a majority of independent directors in the absence of a regular non-executive chairman, SEBI said this proposal appeared to be "too onerous."
"It is proposed to address the concern of PMAC by incorporating the provision that boards of companies which do not have a regular non-executive chairman shall have at least half of the board as independent," the regulator said.
In most public sector enterprises, as also many large private sector companies, the posts of chairman and managing director are held by the same person.
The PMAC had observed that the question of mandatory separation of chairman and CEO posts was not settled globally yet and a good number of companies already had different individuals for these positions.
The HC also directed the counsel for Delhi government to seek instructions and file an affidavit indicating the actual position regarding the proposal of Kejriwal government
The Delhi High Court on Wednesday directed the city government not to implement the 50% subsidy announced by it to people who did not pay their power bills from October 2012 to December 2013.
In an oral order, a bench of justices BD Ahmed and Siddharth Mridul, said, "Don't take any further steps on it". The matter is now listed on 21st February for further hearing.
The Court, meanwhile, directed the standing counsel for the Delhi government to seek instructions and file an affidavit indicating the actual position regarding the proposal of then Aam Admi Party (AAP) government.
The court passed the order as there was "no clarity" on whether the Delhi cabinet had taken a decision to implement the subsidy as claimed by the petitioner Vivek Sharma.
The Court was hearing a public interest litigation (PIL) challenging subsidy given by the Arvind Kejriwal-led AAP government to people who did not pay their power bills from October 2012 to December 2013.
The bench, after going through the government file, observed that a note by ex-CM Kejriwal had said the subsidy proposal needed to be placed before the cabinet.
However, the court also noted that while it appears that no decision had been taken, "there is no clarity on that".
"Get proper instructions and file an affidavit, if necessary, indicating the position," the bench told the Delhi government standing counsel.
During the proceedings, Sharma contended that the proposal appears to have been implemented as according to the media reports, AAP leader Manish Sisodia had openly said so.
Sharma also said that as per media reports, the Lt Governor has directed all government departments to implement the major orders of the former AAP government.
"That is not the point. (As per the file) absolutely no decision has been taken. There is no cabinet decision on paper," the bench told the petitioner.
The PIL has been filed against former Delhi government's announcement of 50% waiver on electricity bills of people who defaulted in payment, saying it will "spread chaos and anarchy by rewarding defaulters instead of penalising them."
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