BOARD COMPOSITION IN LISTED COMPANIES: SIMPLIFIED COMPLIANCE GUIDE

Regulation 17 of SEBI (LODR) Regulations, 2015 outlines the requirements for the composition of the board of directors (BOD) of listed entities. Below is a simplified guide:

1. General Composition Requirements

• The board must maintain an optimum combination of executive and non-executive directors.

• At least 50% of the board members must be non-executive directors.

• There must be at least one woman director on the board.

2. Independent Woman Director Requirement

• The top 1000 listed entities must have at least one independent woman director.

3. Provisions Based on Chairperson Role

• Non-Executive Chairperson:

  • At least 1/3rd of the board must be independent directors.

• Executive Chairperson:

  • At least 50% of the board must be independent directors.

• Special Case: Promoter as Chairperson:

  • If the regular non-executive chairperson is a promoter or related to a promoter (or holds a management position at the board level or one level below), at least 50% of the board must be independent directors.

Explanation:

The term "related to any promoter" includes:

1. If the promoter is a listed entity:

   • Its directors (other than independent directors), employees, or nominees are deemed related.

2. If the promoter is an unlisted entity:

   • Its directors, employees, or nominees are deemed related.

4. Superior Voting Rights (SVR) Equity Shares

• If the listed entity has outstanding SVR equity shares, at least 50% of the board must comprise independent directors.

5. Minimum Number of Directors

• The top 2000 listed entities must have a minimum of six directors on their boards.

6. Age Restriction for Non-Executive Directors

• Non-executive directors aged 75 years or more cannot be appointed unless a special resolution (SR) is passed in the Annual General Meeting (AGM).

By adhering to these requirements, listed companies ensure compliance with SEBI regulations, fostering transparency and good governance in their board operations.

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Article Compiled by:-

~Neel Lakhtariya

(LegalMantra.net Team)