NEW DELHI: As Sebi plans to implement norms for separation of posts of Chairperson and MD of listed companies, Finance Minister Nirmala Sitharaman on Saturday said the regulator should also hear if Indian companies have a view on the matter even as she made it clear that she was not "giving a diktat".
The Securities and Exchange Board of India (Sebi) has asked listed entities to split the roles of chairperson and managing director before the April 2022 deadline. It is to be noted that financial sector regulator Reserve Bank of India (RBI) has implemented this in the banking sector a few years ago.
Listed entities were initially required to separate the roles of chairperson and MD/CEO from April 1, 2020 onwards.
However, based on industry representations, an additional time period of two years was given for compliance.
On issue of split of CMD position, Sitharaman said, "I had reviewed it with Sebi. Some good number of companies has followed it. This norm was brought in by Sebi four years ago. It was one of the global best practices and introduced with the aim of moving towards best practices so that companies are professionally run."
"But I do agree that the way Indian companies are run and built over the decade and over century also depends so much on the family and related members being on the board. So, I am of the view that Sebi - which is an independent regulator. I am not giving them diktat, I am voicing my view, I think if Indian companies have a view then Sebi should also hear them. I will leave it there and I hope that it indicates where I am coming from. This should be giving you some breath of fresh air and moment to heave a sigh of relief. So let's see and I will leave it there," she said.
At the end of December 2020, 53 per cent of the top 500 listed entities had complied with this provision.
Currently, many companies have merged the two posts as CMD (chairman-cum-managing director), leading to some overlapping of the board and management, which could lead to conflict of interest and consequently the regulator in May 2018, came out with its norms to split the post.
The norms were part of the series of recommendations given by the Sebi-appointed Uday Kotak committee on corporate governance.
On the scrappage policy, Revenue Secretary Tarun Bajaj said, there should be some concrete action on that in the next few months.
Prime Minister Narendra Modi in August 2021 launched the national vehicle scrappage policy and had said it will help phase out unfit and polluting vehicles and also promote a circular economy.
Under this policy, people who give their old vehicle for turning it into scrap will be given a certificate by the government. People having this certificate will not be charged any registration fee on the purchase of a new vehicle.
The policy aims to build scrapping infrastructure in the form of Registered Vehicle Scrapping Facilities and Automated Testing Stations in India.