291 listed firms need to split CMD post to meet Sebi norms
Reliance Industries, Infosys, TCS and Bharti Airtel are among the 291 listed companies that will have to appoint a non-executive chairperson on their boards by April 1, 2020 to comply with regulator Sebi's directive and most of these firms will need to split the roles of chairman and managing director for compliance.
Currently, many companies have merged the two posts as CMD (chairman-cum-managing director), leading to some overlapping of the board and management, which could lead to conflict of interest.
Under the new Sebi norms, the top 500 listed entities will have to ensure that the chairperson is a non-executive director from April 1, 2020. It will eventually lead to a split in the post of chairman and managing director.
These norms are part of the series of recommendations given by the Sebi-appointed Kotak committee on corporate governance.
A total of 291 companies (or 58.2 per cent) out of top 500 NSE listed entities by mar- ket capitalisation will have to appoint non-executive chairpersons, including by splitting the CEO/MD and chairperson position, according to data provided by Prime Database based on information available till July 18.
Apart from Reliance Industries, Infosys, TCS and Bharti Airtel, other major firms that need to split the two posts are -- Hindustan Unilever, ONGC, Coal India, Larsen & Toubro and HCL Technologies.
Sunil Bharti Mittal is currently the executive chairman of Bharti Airtel, while Gopal Vittal holds the position of CEO and MD.
Interestingly, Reliance Industries, earlier this month, extended the tenure of Mukesh Ambani, who also holds the position of chairman on its board, as the managing director of the company for another five years.
RIL, Bharti Airtel and TCS will also need to appoint a woman independent director on their respective boards by April 1, 2019.
Some of the other companies that need to have a woman independent director by next year are Housing Development Finance Corp (HDFC), State Bank of India (SBI), Indian Oil Corp and Hindustan Zinc.
A total of 145 (29 per cent) companies out of top 500 NSE listed entities would require to appoint woman independent director by April 1, 2019.
Besides, 335 firms (33.5 per cent) out of top 1,000 NSE listed entities by market capitalisation would require to have one woman independent director by April 1, 2020.
Moreover, 56 companies (5.6 per cent) of the top 1,000 firms listed on the NSE would have to increase the size of their board to at least six directors by April next year.
Presently, 43 companies (4.3 per cent) have 5 directors on their board, 12 companies (1.2 per cent) have 4 directors and 1 company (0.1 per cent) has 3 directors, Prime Database noted.
As such, 70 new directors will have to be appointed in these companies, it added.
Some of the firms that need to increase the size of their boards are Interglobe Aviation, which operates Indigo airlines, Fortis Healthcare, Eicher Motors, Dish TV India and Monsanto India. The Securities and Exchange Board of India (Sebi) has made it compulsory for top 1,000 listed companies to have at least six directors on board.