Countdown begins for CMD post split for PSUs, top-500 listed cos
With a regulatory requirement for top-500 listed firms to split the position of chairperson and managing director (CMD) being less than four months away, pressure is mounting on several PSUs including from the power sector to ensure compliance, especially after state-run ITDC complied with this rule following Sambit Patra's appointment as chairman
image for illustrative purpose
New Delhi: With a regulatory requirement for top-500 listed firms to split the position of chairperson and managing director (CMD) being less than four months away, pressure is mounting on several PSUs including from the power sector to ensure compliance, especially after state-run ITDC complied with this rule following Sambit Patra's appointment as chairman.
While the capital markets regulator Sebi had initially asked listed companiesto separate the roles of chairperson and MD/CEO from April 1, 2020, onwards, it decided to give additional two years for compliance based on industry representations.
The regulation will now be applicable to the top-500 listed entities by market capitalization (mcap), with effect from April 1, 2022. As at the end of 2020, only 53 per cent of the top-500 listed entities had complied with this provision and experts feel that PSUs need to act faster to ensure compliance due to a relatively longer period involved in their board-level appointments, largely because of much more detailed background checks and multiple approvals involved in the process.
The pressure is expected to be greater for power sector PSUs as a majority of those are part of top-500 listed companies by market capitalisation, which are required to split the post by April 1, 2022. These include NTPC, NHPC, PGCIL, REC, PFC, SJVNL, PTC India. At NTPC, Gurdeep Singh holds the position of CMD, while Abhay Kumar Singh is CMD at NHPC, Ravinder Singh Dhillon is at PFC, K Shreekant at PGCIL, NL Sharma at SJVNL. At PTC India, Rajib K Mishra is holding the additional charge of CMD, after the sudden resignation of Deepak Amitabh from the post. The issue of separating the posts of chairperson and MD/CEO holds greater importance in the wake of reported governance issues at some power sector companies, while there have been sudden board-level exits too among other concerns. Pavan K Vijay, founder of legal and financial consulting group Corporate Professionals, said sudden exits in the top management of any company create a void that has to be carefully managed.
