Introduction
It is related to the compliance of Regulation 17 (1A) of SEBI ( listing obligations and disclosure requirements) regulations as amended, in respect ofNon-Executive Independent Directors of a listed company( in short, “Company”) for the type of Director whose age as on the effective date of the said amendment is 75 years or more. In this article, we will let you know about the new SEBI Regulation for Senior Directors. Besides, if you are thinking for Company registration, then the experts of Legal Raasta can provide you the best advice and process to incorporate a company. Follow our blog for more details.
Read more: Executive and Non-Executive Director: Meaning, Differences, Requirements
New SEBI Regulation for Senior Directors
“No listed entity shall appoint a person or continue the directorship of any person as a Non-Executive Director who has attained the age of seventy-five years unless a special resolution is passed to that effect, in which case the explanatory statement annexed to the notice for such motion shall indicate the justification for appointing such a person.”
It is clear from the above statement that two essential aspects of Non-Executive Directors have been covered in this Regulation for compliance—
- Appointment of a person as a director
- Continue the directorship of any person as a director
A special resolution of the shareholders of the company as a compliance must be passed to that effect under which case the explanatory statement annexed to the notice for such motion shall be indicated the justification for appointing such a person.
It would be easily seen New SEBI Regulation for Senior Directors that the last portion of the provision mentions about ” Justification for appointing such a person” who is the Director and does not mention about continue the directorship. Although, a considered view is possible that since the opening portion of the provision clearly mentions about the appointment of a person as a Non-executive director or continuation of non-executive directorship of a person who has reached to the age of 75 years as well as the passing of a special resolution is to “That effect”, the provision of “Justification” in the explanatory statement of the notice also relates to both appointment of director as well as continuing the directorship. Whether the person concerned is independent or not independent, it is immaterial but he must be a non-executive director.
Conclusion
As a compliance, the shareholders of the company shall have to pass a special resolution for his continuation as a non-executive independent director until the end of his present five years tenure and the explanatory statement to be annexed to the notice of the general meeting of the shareholders for such motion shall indicate the justification for his continuing the directorship.
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Related Article:
Appointment of Director as per Companies Act 2013
