The Securities and Exchange Board of India (Sebi) overhauled the norms pertaining to the appointment, removal, and remuneration of independent directors.
- The appointment, re-appointment, and removal of independent directors shall be through a special resolution, which requires 75 per cent votes in support instead of 51 per cent, as in the case of an ordinary resolution.
- Also, the nomination and remuneration committee (NRC), which selects candidates for appointment as independent directors, will be required to have two-thirds IDs, as against the existing requirement of a majority.
- Further, the NRC will have to disclose and justify the skill-sets while selecting a candidate.
- Key managerial personnel and their relatives or employees of the promoter group will have to observe a three-year cooling-off period before they get appointed as an independent director.
- Sebi has also tightened rules related to the resignation of independent directors. The regulator has said the new framework will come into play from January 1.