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SEBI: ‘No deadline extension for splitting post of CMD’

Sebi Chairman Ajay Tyagi at the market regulator’s headquarters in Mumbai on Wednesday. (Express photo by Pradip Das)

The Securities and Exchange Board of India (Sebi) said on Wednesday it will not extend the timeline to comply with its new rule that mandates a split in the post of chairman and managing director of a company and also bars relatives from holding key jobs in a company.

In May 2018, Sebi asked the top 500 listed companies to split the post of chairman and managing director by April 2020. Sebi’s decision came after the recommendations of the Uday Kotak-led panel on corporate governance.

At present, several listed firms have integrated the two positions as CMD (chairman-cum managing director) that overlap the board and management in some cases, which could cause conflict of interest. A number of such firms have requested the Centre and Sebi to review this norm.

However, Sebi Chairman Ajay Tyagi on Wednesday said the regulator has given “sufficient time” to firms to understand the rule and plan for it. “Extending the time will only mean that they (the companies) don’t want to do it.” Tyagi said the idea of splitting the position is to bring about a balance in power and decision making as the leader of the management will be different from the board’s leader.

The regulator said a Sebi group is looking into the classification of promoter, promoter group and entity in control and will soon submit its views on the issue. “It is an issue that needs to be looked into,” Tyagi said.

Apart from this Tyagi also said that it is studying the request of the National Stock Exchange to allow it to launch an initial public offering (IPO). In May, Sebi barred the NSE from accessing the securities market for six months.