The Committee on Corporate Governance was constituted by SEBI in June 2017, under the Chairmanship of Mr. Uday Kotak, to make recommendations to SEBI for improving standards of corporate governance of listed entities in India. The Committee submitted its report detailing several recommendations on October 5, 2017; was placed on the SEBI website for public comments.
Few recommendations of the same were accepted by SEBI on March 28, 2018.
Other important recommendations:
ANNUAL GENERAL MEETINGS:
- Top 100 entities to hold AGMs within 5 months after the end of FY 2018-19 i.e. by August 31, 2019
- Webcast of AGMs will be compulsory for top 100 entities by market capitalization w.e.f. FY 2018-19
Revised Framework for non-compliance of the Listing Regulations:
- Non-compliance will lead to the imposition of fines by stock exchanges.
- Empowers stock exchanges to freeze the shareholding of the promoter and promoter group in such non-compliant entity as well as their shareholding in other securities.
- Suspension if non-compliance persists.
*1. Regulation 2 (1) (zb) of SEBI (ICDR) Regulations, 2009, defines promoter group as:
“promoter group” includes:
(i) the promoter;
(ii) an immediate relative of the promoter; and
(iii) in case promoter is a body corporate:
- a subsidiary or holding company of such body corporate;
- any body corporate in which the promoter holds 10% or more of the equity share capital or which holds 10% or more of the equity share capital of the promoter;
- any body corporate in which a group of individuals or companies or combinations thereof which hold 20% or more of the equity share capital in that body corporate also holds 20% or more of the equity share capital of the issuer; and
(iv) in case the promoter is an individual:
(A) any body corporate in which 10% or more of the equity share capital is held by the promoter or an immediate relative of the promoter or a firm or HUF in which the promoter or any one or more of his immediate relative is a member;
(B) any body corporate in which a body corporate as provided in (A) above holds 10% or more, of the equity share capital;
(C) any HUF or firm in which the aggregate shareholding of the promoter and his immediate relatives is equal to or more than 10% of the total; and
(v) all persons whose shareholding is aggregated for the purpose of disclosing in the prospectus under the heading “shareholding of the promoter group”:
Provided that a financial institution, scheduled bank, [foreign portfolio investor other than Category III foreign portfolio investor] and mutual fund shall not be deemed to be promoter group merely by virtue of the fact that 10% or more of the equity share capital of the issuer is held by such person:
Provided further that such financial institution, scheduled bank and [foreign portfolio investor other than Category III foreign portfolio investor] shall be treated as promoter group for the subsidiaries or companies promoted by them or for the mutual fund sponsored by them.
