New Rules of SEBI and a Change for Betterment of the Independent Directors

Date:

Overview:

The Capital Market Regulator SEBI has overhauled the rules on the appointment, remuneration, removal of independent directors to ensure their effectiveness.

The development assumes to have a significance in the backdrop of the role of the independent directors.

They were under scrutiny for the failure in detecting and preventing fraud and mismanagement.

The rules that are newly framed will be applicable from January 1, Next Year, the SEBI said in a notification.

The New Rules: 

The new rules consist of appointments and removals of independent directors in a listed company, which the shareholders‘ special resolution will do.

The Capital Market Regulator SEBI has overhauled the rules on the appointment, remuneration, removal of independent directors to ensure their effectiveness.

The development assumes to have a significance in the backdrop of the role of the independent directors.

They were under scrutiny for the failure in detecting and preventing fraud and mismanagement.

The rules that are newly framed will be applicable from January 1, Next Year, the SEBI said in a notification.

The new rules consist of appointments and removals of independent directors in a listed company, which the shareholders’ special resolution will do.

In the resolution, the number of votes in favour of the resolution should be at least.

Under the new rules, appointment, re-appointment and removal of independent directors in a listed company will be made through a special resolution of shareholders.

Special Resolutions:

In the special resolution, the number of votes favouring the resolution should be at least three times those against the resolution.

This will ensure that the number of votes in favour of the resolution should be at a minimum of three times those against the resolution and that the directors (independent) are not appointed or removed by the promoters’ interest.

The listed entity will have to ensure that shareholders’ approval for the appointment of a person on the board of directors is taken at the next general meeting or within three months from the date of work, whichever is earlier, Sebi said in a notification dated August 3.

 

 

Arindam Das
Arindam Das
Bachelor's of Law Today! Contribution to the World Tommorow! Arindam is a Law Geek who has an interest in researching, writing and ofcourse standing up against the wrong. Besides having an interest in Law, the other things that excites him are Entrepreneurship,Business, Technology and Stock Exchanges

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