New Listing Norms to be Effective October 1: Sebi

Mumbai: Securities and Exchange Board of India (Sebi) Chairman UK Sinha has said the capital market watchdog will go ahead with implementation of the new corporate governance norms for listed companies from October 1.

"Listing agreement regulations will kick start from October 1 onwards," Mr Sinha told reporters on the sidelines of a conference in Mumbai on Monday.

Sebi had in April this year issued detailed corporate governance norms for listed companies providing for stricter disclosures and protection of investor rights, including equitable treatment for minority and foreign shareholders.

The new rules require companies to get shareholders' approval for related party transactions, establish whistle blower mechanism, elaborate disclosures on pay packages and have at least a woman director on their boards.

They are aligned with the new Companies Act and are aimed at encouraging companies to "adopt best practices on corporate governance".

The capital market regulator has amended clauses 35B and 49 of the listing agreement. Under the changed 35B norms, listed companies are required to provide the option of facility of e-voting to shareholders on all resolutions proposed to be passed at general meetings.

Under clause 49, pertaining to corporate governance, listed companies have to get shareholders' nod for related party transactions. All these new stipulations will be effective from October 1.

"All existing material related party contracts or arrangements as on the date of this circular which are likely to continue beyond March 31, 2015 shall be placed for approval of shareholders in the first general meeting subsequent to October 1, 2014," Sebi had said in a circular dated April 17, 2014.

Besides, the regulator has come out with norms to ensure "equitable treatment of all shareholders, including minority and foreign shareholders".

Apart from providing adequate and timely information to all shareholders, listed companies should also facilitate the exercise of voting rights by foreign shareholders.

The new norms, which have been finalized after detailed consultations over draft regulations released in January 2013, exclude 'nominee directors' from the definition of independent directors. Besides, there would be expanded role of audit committee and enhanced disclosure of remuneration policies.

Sebi's board had approved the new set of norms during its meeting held in February.