A committee set up by stock market regulator Securities and Exchange Board of India is considering several far-reaching changes in rules governing companies, including a proposal to separate the roles of the chairman and the managing director or chief executive officer of listed companies to prevent concentration of management powers in the hands of one individual.
Several firms, especially state-owned enterprises, have the same person holding the post of both chairman and managing director.
The issue has been discussed by the primary market advisory committee, or PMAC, formed by SEBI, but the proposal is still at an early stage. Making it the norm will lead to a major overhaul of the board structure of most listed companies in India.
In countries like the US, the UK and France, the role of a chairman is distinct from that of the chief executive. However, in India it is up to companies to decide on whether the roles need to be separated.
SEBI is also likely to announce the draft takeover norms today, with several recommendations that will change the face of corporate India.
According to reports, the panel has recommended higher open offer size and trigger for attracting takeover code. The SEBI-appointed panel is in favour of the acquirer making an offer for up to 100-per cent stake in any listed company, thus making the cost of a takeover higher.