Sebi overhauls CG norms for listed firms

Listed companies will now have to follow a stricter set of corporate governance norms, which require them to check excessive executive pay, put in place whistle-blower policies and orderly succession plans, and keep at least one woman director on their boards.

In a major overhaul of corporate governance norms for listed companies and their top executives, Sebi board on Thursday also cleared proposals requiring greater oversight of and by independent directors, greater checks on all related party transactions involving promoters and directors and limits on directorships and remuneration of board members.

The new norms would come into effect for all listed companies with effect from October 1, 2014, market regulator Sebi said.

Chairman of Sebi, U K Sinha said that the new norms seek to align existing Sebi regulations with the new Companies Act and would be soon incorporated into the listing agreement for implementation.

Besides, the proposals include compulsory whistle blower mechanism, expanded role of audit committee, prohibition of stock options to independent directors and enhanced disclosure of remuneration policies.

Separate meetings of independent directors and constitution of 'stakeholders relationship committee' are also part of the proposals.

Other new measures are performance evaluation of independent directors and board members, prior approval of audit committee for all material related party transactions followed by approval by shareholders (after excluding related parties from voting) through special resolution.

Easier KYC norms

At the meeting, Sebi also cleared a proposal to allow various market entities such as brokers and mutual funds to get investor details from centralised know your customer (KYC) agencies, rather than carrying out a fresh KYC verification procedure.

The regulator decided to do away with the option of fresh KYC processing being carried out, if the concerned investor has once gone through the KYC procedure with any of the registered intermediaries.