UDAY KOTAK PANEL RECOMMENDATIONS IN A NUTSHELL
ON BOARD COMPOSITION
Minimum number of directors increased from three to six Minimum number of independent directors increased from a third to a half At least one independent woman director Ratification by shareholders if a director fails to attend at least half of the board meetings Disclosure of competencies/expertise of directors Special resolution for appointment of non-executive directors with age over 75 years Minimum number of board meetings in a year increased from four to five Presence of at least one independent director at every board meeting Separation of roles of chairperson and the CEO/MD for listed entities
ON INDEPENDENT DIRECTORS
Checks and balances to ensure independence of independent directors Prescription of minimum compensation and sitting fees Detailed reason for resignation Insurance to protect from significant responsibilities and liabilities Induction and training programmes Alternate director not permitted Appointment of a lead independent director Exclusive meeting of independent directors
IMPROVEMENT IN ACCOUNTING AND AUDIT STANDARDS
Quantification of audit qualifications to be mandatory Auditors should have a right to obtain independent external opinions More quarterly disclosures on consolidated basis Reason for resignation of auditors Audit quality indicators to be made public, to increase transparency Disclose credentials and fees for appointment of auditors IndAS implementation for all entities including banks, NBFCs and insurance companies Power to Sebi to act against auditors More power to ICAI, regulator of auditors
ON BOARD COMMITTEES
Minimum number of audit committee meetings be increased to five every year Meeting of all other board committees at least once a year Audit committee to scrutinise the end-utilisation of funds Committee recommends the requirement of having at least two-thirds of its independent directors on nomination and remuneration committee (NRC) Greater role of NRC, including setting compensation for KMPs Presence of one independent director compulsory for quorum Requirement of risk management committee extended to top 500, companies amid growing cyber threat Cap on number of committees for each member
ON RPT, INFO-SHARING WITH PROMOTERS
Formal framework for sharing of sensitive information with non-board members Creation of ‘designated person’ for sharing of such info Cap on remuneration of promoter-directors RPTs to be disclosed once in every six months Special resolution if royalty/brand payments exceed 5% of turnover
ON PSUs
Independence of PSUs from administrative ministry Consolidation of government stake in listed PSUs under holding entity structure Setting up of independent board with diversified skill set
GREATER INVESTOR PARTICIPATION
Remove the boundaries of physical meetings by use of technology AGM to be conducted within five months from end of a financial year Live web-cast for all shareholder meetings; e-voting deadline to be extended from 5pm to midnight Sebi to introduce common stewardship code for all institutional investors Stewardship code to cover aspects such as better monitoring of investee companies Voting rights on treasury stock to be withdrawn
ON DISCLOSURE AND TRANSPARENCY
Soft copy of annual reports Mobile numbers and email addresses compulsory for all demat accounts Linking of all demat accounts with Aadhaar Details of ADR, GDR holders with 1% shareholding Updated list of all credit ratings to be made available at one place for each company All disclosures in searchable formats Common filing platform to be devised by exchanges Disclosures of significant changes in key financial indicators Disclosure of basis of valuation for any scheme for arrangement Disclosures of hedging strategy
CAPACITY BUILDING AT SEBI
Increase staff strength at Sebi to improve monitoring and enforcement Revolving-door policy between Sebi and private sector Greater coordination between Sebi and MCA
PROTECTION OF WHISTLE-BLOWER
Grant of leniency and protection against victimisation to whistle-blowers