SEBI’s Circular for implementation of certain recommendations of the Committee on Corporate Governance

The Committee on Corporate Governance under the Chairmanship of ShriUdayKotak made several recommendations. Most of amendments necessary to implement these recommendations have been made in the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 vide notification dated May 9, 2018. There a few recommendations as accepted by the SEBI, which are to be implemented through issue of a circular.

Accordingly, the following provisions shall apply to entities whose equity shares are listed on a recognized stock exchange:

a. Disclosures on Board Evaluation: The listed entity may consider the following as a part of its disclosures on board evaluation:

i.        Observations of board evaluation carried out for the year.

ii.      Previous year’s observations and actions taken.

iii.    Proposed actions based on current year observations.

b. Group Governance Unit: Where the listed entity has a large number of unlisted subsidiaries:

i.        The listed entity may monitor their governance through a dedicated group governance unit or Governance Committee comprising the members of its board of directors.

ii.      A strong and effective group governance policy may be established by the entity.

iii.    The decision of setting up of such a unit/committee or having such a policy shall lie with the board of directors of the listed entity.

c. Medium-term and long-term strategy: The listed entity may consider the following with respect to disclosure of medium-term and long-term strategy of the entity:

i.        It may disclose, under the Management Discussion and Analysis section of the Annual report, within the limits set by its competitive position, its medium-term and long-term strategy based on a time frame as determined by its board of directors.

ii.      The listed entity may articulate a clear set of long-term metrics specific to the company's long term strategy to allow for appropriate measurement of progress.

d. The clause 4.4 of the SEBI Circular No. CIR/CFD/CMD/56/2016 dated May 27, 2016 shall stand deleted.

[Circular No.: SEBI/HO/CFD/CMD/CIR/P/2018/79]