Markets regulator SEBI on Friday extended the deadline for February 26 to submit public comments on the proposal for appointment of managing directors and full-time directors.
The Regulator had issued a consultation paper on 27 January at a general meeting of a listed institution on the provision for appointment/reappointment of persons who failed to elect directors/managing directors full-time.
It had sought comment by February 12, 2021.
However, “It has been decided to extend the timeline for submission of comments till February 26, 2021,” SEBI said on Friday.
The proposal is intended to ensure shareholder supremacy over appointment of such posts.
The Regulator had proposed through the consultation paper that a person who has been rejected as a Managing Director or a full-time director by the shareholders of the listed company may be re-appointed to this post only after the company has met various conditions, including providing detailed justification.
If the shareholders of the company again refuse to nominate individuals, such persons cannot be considered for appointment as directors or continue as directors for two years.
Under this proposal, if a person whose appointment as Managing Director (MD) or full time Director (WTD) or reappointment is rejected by the listed firm shareholders, they shall not be re-appointed to such post until certain conditions are satisfied, SEBI said in the consultation paper.
The Nomination and Remuneration Committee and the Board approve the appointment after recording the reasons for such appointment, in detail, despite the rejection of the terms by the shareholders.
After appointment of such directors, the listed company should disclose the reasons for naming such persons in the stock exchange within 24 hours with the recommendations of the Nomination and Remuneration Committee.
In other conditions, the listed body should immediately seek shareholder approval for such appointments at the next general meeting or within three months, as previously.
If shareholders can again reject the candidacy of individuals, such persons cannot be considered for appointment as directors, or they cannot continue as directors of a specific listed entity for a period of two years from the date of rejection by the shareholders, SEBI said.
The Board cannot appoint a person who fails to elect a director in the general meeting as an additional director.
However, the Board is not explicitly prohibited from re-appointing any person as MD or WTD, whose appointment to such positions was rejected by shareholders in the general meeting.