09-07-2021 | 16:41 PM
SEBI amends norms for Independent Directors
• Security and Exchange Board of India (SEBI) has cleared amendments to SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 while reviewing regulatory provisions related to independent directors.
Key Highlights
• To boost corporate governance between listed companies, SEBI approved amendments to rules that govern appointment, re-appointment and removal of independent directors.
• It also amended the rules that required disclosure letters of such individuals.
Key Amended norms
• Appointment, re-appointment and removal of independent directors will be done only through special resolution passed by shareholders. This provision will be applicable to all listed entities.
• Under the amended rules, a one-year cooling period will be given for an independent director transitioning to a whole-time director in the same company or holding or subsidiary or any company belonging to the promoter group.
• Process to be followed by the Nomination and Remuneration Committee (NRC) when it is selecting candidates for appointment as independent directors was made transparent.
• NRC required to disclose skills required for appointment as independent director and how the proposed candidate fits into that skillset.
• Composition of NRC has been updated to include 2/3rd independent directors instead of the current requirement of majority of independent directors.
• Under the new rules, resident Indian fund managers have been allowed to be constituents of foreign portfolio investors and to amend mutual fund rules to provide investment of a minimum amount as prescribed by SEBI.
• Presently, investment of 1% of the amount raised in a New Fund Offer (NFO) or an amount of Rs 50 lakh (whichever is less) is required.
NOTE: Accredited investors can be individuals, HUFs, family trusts, partnership firms, sole proprietorships, trusts and body corporates on the basis of financial parameters.
