India: Rules for listed companies, independent director requirements
The amendments will be applicable to all listed companies effective 1 January 2022.
Independent director requirements
The Securities and Exchange Board of India approved amendments to the regulations governing listed companies and specifically concerning “independent directors.”
The amendments mainly relate to the following areas:
- Eligibility of independent directors
- Appointment, reappointment, and resignation of independent directors
- Committees of the board
- Related-party transactions
- Directors and officers insurance for independent directors
The amendments will be applicable to all listed companies (however, the requirement to procure directors and officers insurance for independent directors is applicable to the top 1,000 listed companies) effective 1 January 2022.
The Securities and Exchange Board of India (SEBI) (Listing Obligations and Disclosure Requirements), Regulations, 2015 provides rules for transparency and disclosures by all Indian listed companies. Amendments to these regulations have been made from time to time, to reinforce compliance and to protect the interest of investors.
The SEBI recently focused on strengthening the independence of directors and set up various committees to deliberate and make recommendations. To bolster the independence of directors and to protect the interests of the minority shareholders and other functions, the SEBI in March 2021 issued a consultation paper to review the regulatory provisions relating to independent directors on the boards of listed companies. The amendments stemmed from this consultation.
Read a September 2021 report [PDF 745 KB] prepared by the KPMG member firm in India
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