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Press Trust Of India Large corporates such as HUL and RIL have begun arrangements to comply with regulator SEBI’s directive to split the roles of chairman and managing director by April 1, 2020, but several smaller companies are still giving their CMDs tenures beyond the deadline.
Many companies have sought shareholders’ approval to extend the tenure of their CMDs, which, in several cases, will fall foul of SEBI’s guidelines. The regulator has mandated that the country’s top 500 listed companies should have a non-executive chairman and a separate person as CEO or Managing Director from April 2020.
The defaulters will face strict penal action, which may include barring the Chairmen or MDs concerned from holding any board position, officials added.
Currently, many firms have the two posts merged as CMD, leading to overlap of the board and management, which regulators feel, could lead to conflict of interest.
PTC India has re-appointed Deepak Amitabh as CMD “with effect from October 16, 2018 till he reaches the age of 62 years — up to October 8, 2022”. PVR has also extended the tenure of Ajay Bijli as its CMD and JBM Auto too extended the tenure of its CMD Surendra Kumar Arya for five years. Gujarat Ambuja Exports has re-appointed Manish Gupta as its CMD “up to December 27, 2023”. Besides, Deepak Fertlisers & Petrochemicals Corp has extended the tenure of SC Mehta for five years.
According to a report by Prime Database, 291 companies (or 58.2 per cent) of the top 500 NSE-listed entities will have to appoint non-executive chairpersons, including by splitting the CEO/MD and chairperson position.
Last month, Reliance Industries extended the tenure of Mukesh Ambani, who also holds the position of board Chairman, as the company’s MD for another five years. This will be effective on expiry of his present term till April 19, 2019.
Besides, HUL appointed Sanjiv Mehta, who holds the position of MD and CEO, as its Chairman. However, the HUL board decided that Mehta’s current tenure as Chairman will be till March 2020, so as to comply with SEBI rules.
Further, ITC has extended the tenure of YC Deveshwar as non-executive chairman till 2020. Sanjiv Puri, who had taken over as CEO from February 2017, has been re-designated as its MD.
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