SEBI has notified standards for appointment of heads of listed companies
New Delhi:
By introducing strict standards, market regulator SEBI has said that a person who has been rejected by shareholders at a general meeting can only be appointed or reappointed as CEO or full-time director or manager, after he has provided detailed justifications and ensured that several conditions are met.
“The appointment or reappointment of any person, including as a director (MD) or full-time director (WTD) or manager, who has previously been rejected by shareholders at a general meeting, shall be made only with the prior approval of shareholders,” the statement said. supervisor in a statement Monday.
Before considering the appointment or reappointment of any such person who was previously rejected by the shareholders, there must be a detailed explanation and justification by the Company’s Nomination and Remuneration Committee and the Board of Directors for recommending the person.
Under the Companies Act, 2013, the board of directors cannot appoint a person who is not elected as a director at a general meeting as an additional director.
However, this does not expressly prohibit the board from reappointing any person as MD or WTD whose appointment to such positions has been rejected by the shareholders at the general meeting.
Further, the board of a publicly traded entity may continue to appoint such persons as WTD or MD even after subsequent rejections by the shareholders.
SEBI has amended the List of Obligations and Disclosure Requirements (LODR) Regulations regarding the appointments.
Separately, it has also changed the rules regarding credit rating agencies.
