Companies to get more time to take women directors on board

MUMBAI: Companies have more time to place woman directors on their boards, with the capital market regulator extending the compliance deadline by another six months.

Small companies whose equity share capital does not exceed Rs 10 crore and net worth Rs 25 crore as on the last day of the previous financial year, have been excluded from complying with the new provisions of Clause 49. Also, those listed on the SME (small and medium enterprise) stock exchange have been exempted from the requirements.

Rules on appointment of woman director on company boards would be applicable from April 1, 2015, Sebi said in a circular on Monday posted on its website.

According to Indian Boards, a joint initiative of Prime Database and NSE, 755 of the 1,469 companies listed on the National Stock Exchange are yet to appoint women directors as on August 31, 2014.

The regulator has also aligned certain provisions on maximum tenure of independent directors and related party transactions with the Companies Act. Under the Companies Act, an independent director can have a maximum of two tenures of five consecutive years, with a cooling off period of three years.

Related party transactions

Companies here are now required to seek prior approval from the audit committee. But the regulator said the committee could grant an omnibus approval to those transactions repetitive in nature.

Besides, the committee should satisfy itself that it is in the interest of the company. The omnibus approval must also be specific in nature about the name of the related party, nature, period and maximum amount of transaction that can be entered into, among other things.

In case such details are not available, the committee can approve transactions whose value does not exceed Rs 1 crore per transaction. The regulator said the audit committee should review related party transactions on a quarterly basis and the omnibus approvals would be valid for one year.

Transactions between two government companies have been exempted. Sebi has also clarified that a majority of members of the risk management committee of companies should be board members.

“Senior executives of the company may be members of the said committee, but the chairman of the committee shall be a member of the board of directors,” Sebi said.

Companies planning to offload shares in subsidiaries that could reduce its shareholding to less than 50 per cent would have to do so after a special resolution is passed approving the same.