Tighter norms on anvil to appoint directors rejected by shareholders

SEBI on Wednesday proposed stricter norms for re-appointment of managing directors or whole-time directors of listed companies. The regulator has said that the person rejected by a listed company’s shareholders as managing director or whole-time director can be appointed or re-appointed to the posts only after the company fulfils various conditions, including providing detailed justifications.If company shareholders reject the candidature of the persons again, such persons cannot be considered for appointment as director or continue as a director for two years. The proposals are part of a discussion paper floated by SEBI to receive comments from the market participants.

Other conditions include that the company’s nomination and remuneration committee recommend such appointment and the board has to approve after recording reasons. The proposal aims at ensuring shareholder supremacy on the appointment of such positions.