Separation of chairperson, MD positions voluntary: Industry welcomes Sebi's decision

Industry bodies on Tuesday welcomed Sebi's decision to make it voluntary for listed firms to separate the positions of Chairperson and MD/CEO, stressing that leadership arrangements are best left to the discretion of boards and the shareholders. Capital markets regulator Sebi on Tuesday said the requirement to split Chairperson and Managing Director/Chief Executive Officer positions at listed companies will not be mandatory and will be implemented on a voluntary basis.

The listed entities were required to split the roles before April 2022.

"CII had submitted that the amendment with regard to separation of roles of Non-Executive Chairperson and MD/CEO could lead to over-regulation and act as an impediment to a conducive business environment," CII Director General Chandrajit Banerjee said.


"The provision that Chairman and MD/CEO should not be related, could be onerous and may not be required, especially in the light of sufficient checks and balances present in the existing regulations to counter any potential ill-effects of such a situation," he added.

Banerjee observed that the decision may be left to the discretion of boards and to the will of shareholders and it is important that Indian entrepreneurs are not placed at a disadvantage by imposing such requirements.

FICCI Director General Arun Chawla said, "FICCI is grateful to the Regulator for appreciating industry's issues with mandatory separation of Chairman and MD/CEO position and addressing the concerns of industry especially India's invaluable family businesses."

He further said the leadership arrangements that would drive business excellence are best left to the judgement of the shareholders.

Earlier this month, Finance Minister Nirmala Sitharaman had said the regulator should hear if Indian companies have a view on the matter even as she made it clear that she was not "giving a diktat".