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The market regulator will extend the deadline for listed companies to split the post of chairman and managing director by two years, sources close to SEBI said. The deadline was March 31, 2020, but many top corporate houses had sought more time to implement it.
A committee led by Uday Kotak had first suggested such a move to SEBI as part of a major overhaul of corporate governance norms for listed companies. The suggestion was that only a non-executive director should be made chairman, which would eventually lead to the splitting of the posts of chairman and MD. The idea is to segregate the roles between the chairman, who presides over the board and deals with broader issues, and the MD, who is mainly in charge of the day-to-day operations.
The sources said SEBI did not want to fully scrap the rule as it had approved it earlier, and hence, only the extension of the deadline. But it is likely that the rule will take another form or be re-evaluated when the next deadline approaches.
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