CAIRR Update August 09, 2021

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CAIRR Update August 09, 2021

Summary of the Corrigendum issued by SEBI on 06/08/2021
SEBI extends the applicability of the amendments to LODR regulations to 01/01/2022
SEBI has extended the applicability of the amendments made to LODR Regulations vide its notification dated 03/08/2021 to 01/01/2022 (as against the earlier effective date of 03/08/2021).
The gist of the amendment notification is reproduced here for your ready reference:
Key highlights of the amendment are:

      1.       Criteria for ascertaining pecuniary relationship between the Independent Director(ID) and the listed entity, its holding, subsidiary or associate company, or its promoters, or directors is redefined.

      2.       Shareholders’ approval Appointment of a Director: The listed entity to obtain shareholders’ approval for appointment of a person on the Board of Directors at the next general meeting or within a period of three months from the date of appointment, whichever is earlier.

      3.       Minimum number of IDs required in a Nomination and Remuneration Committee(NRC) is increased to 2/3rd (as against ½).

      4.       Approval of Related Party Transactions (RPTs): Only those members of the audit committee, who are independent directors, shall approve RPTs.

      5.       Independent Directors:

a.       The appointment, re-appointment or removal of an ID has to be approved by the shareholders by a special resolution.

b.      From 01/01/2022, the top 1000 listed entities by market capitalization calculated as on March 31 of the preceding financial year, shall undertake Directors and Officers insurance (‘D and O insurance’) for all their IDs of such quantum and for such risks as may be determined by its Board of Directors.

c.       An ID shall be appointed as an executive / whole time director on the board of the listed entity, its holding, subsidiary or associate company or on the board of a company belonging to its promoter group, only after a period of one year has elapsed from the date of his/her resignation from the listed entity.

d.      NRC to evaluate and identify suitable ID, considering the prescribed parameters and may use the services of external agency in this regard.

e.       Additional Disclosures in the event of resignation of an ID: Names of listed entities in which the resigning ID holds directorships, indicating the category of directorship and membership of board committees, if any, to be disclosed to Stock Exchanges.

      6.       Additional disclosures, as prescribed, to be provided to shareholders in case of appointment/re-appointment of a director.

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