SEBI CLEARS NEW CORPORATE GOVERNANCE NORMS

To exhort listed companies and their top executives to follow 'good business practices', market regulator Sebi cleared new corporate governance norms which shall be effective from October 1, 2014. These new norms will be incorporated in the listing agreement also. Following are the new rules disclosed:

• The new rules exclude Nominee Director from the definition of Independent Director. 
• Sebi has restricted the tenure of Independent Directors to 2 to 5-year terms. Directors nominated by the company's promoter cannot be classified as an independent director. An Independent Director has a maximum term of 5 years extendable by another 5 years subject to a special resolution.
• It is mandatory for the listed companies to disclose remuneration policies of CEO and Executive Directors, Related-Party Transactions (RPTs) and appointment and resignations of Independent Directors.
• Mandatory constitution of Nomination and Remuneration Committee. Chairman of the said committee should be independent. 
• Separate meetings of the Independent Directors should be held.
• A person cannot be an Independent Director in more than 7 companies and 3 in case the person is serving as a Whole Time Director and cannot accept stock option plans.
• It is mandatory for the companies to have an orderly succession plan for appointments to the board and senior management, a whistle blowing policy and to appoint at least 1 woman director on its board, besides empowering minority shareholders to approve related-party transactions.
• The minimum capital requirement of an asset management company has been increased from Rs. 10 crore to Rs. 50 crore.
• Get public shareholder's nod for RPTs and carry out performance evaluation of all directors. The constitution of a Stakeholders Relationship Committee has been made mandatory.
• The role of Audit Committee has been expanded to its prior approval for all RPTs by shareholders through special resolution with related parties abstaining from voting.
• The scope of the definition of RPT has been widened to include elements of Companies Act and Accounting Standards.