As part of a major overhaul of corporate governance norms for listed companies, a panel set up by the Securities and Exchange Board of India (Sebi) on Thursday recommended limiting chairmanship to only non-executive directors and appointing at least one woman as independent director, according to a PTI report on Thursday.
The current rules require that there must be one woman on board, irrespective of her being an independent or executive director. The new recommendations also call for the boards to have at least half the members as independent directors, up from one-third at present.
The PTI report said that while the proposal for only non-executive director being allowed to be made chairman would eventually lead to a split in the chairman and managing director posts, the committee also suggested increasing the minimum board strength to six members and the number of board meetings to five in a year.
The panel suggested that at least half the board members be independent directors at listed companies, while all directors must attend at least half the number of board meets. Besides, the approval of public shareholders would be mandatory when having non-executive directors over 75 years of age on the board.
Besides, the panel, headed by Kotak Mahindra Bank Executive Vice-Chairman & Managing Director Uday Kotak, also suggested a minimum remuneration of Rs 5 lakh per annum for independent directors and a sitting fee of Rs 20,000-50,000 for each board meeting.
The report said that the panel also sought to make it mandatory to seek the approval of public shareholders for annual remuneration of executive directors from the promoter family if the amount exceeds Rs 5 crore or 2.5 per cent of the company's net profit.
In case of more than one such director, the same condition would apply for aggregate annual remuneration exceeding 5 per cent of the net profit.
The approval of shareholders will be required every year if the annual remuneration payable to a single non-executive director exceeds 50 per cent of the total annual remuneration payable to all non-executive directors.
Market regulator Sebi has sought public comments till November 4 on the panel's recommendations, which run into 177 pages.
