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Equity News

SEBI may cap number of subsidiaries

3 October 2017 (12:55PM)

SEBI committee on corporate governance may cap the number of subsidiaries for a listed company or layers of subsidiaries/companies.

 

 

SEBI committee on corporate governance may cap the number of subsidiaries for a listed company or layers of subsidiaries/companies. The committee will be submitting its report shortly, reported a leading news daily.
 
The boards and auditors of Indian companies will be made more accountable for corporate governance standards, once the recommendations by the committee are approved. The panel has expressed concern on the large number of subsidiaries, related party transactions and number of layers of subsidiaries that many listed companies have. It may allow companies to form only three layers of subsidiaries.
 
The panel may also list out norms for independent directors’ attendance, information sharing outside the board, minority shareholders’ approval for royalty payment, and increasing participation of investors in annual general meetings. Currently, SEBI and the exchanges don’t regulate the subsidiaries because most of them are unlisted.
 
The government had recently announced norms for the number of subsidiaries allowed for unlisted companies. SEBI will be making norms for listed companies on similar lines.
 
The committee may also suggest norms for sharing business details with promoters. Currently, there are no defined rules for the same. Some members of the committee are of the view that the boards of companies should be allowed to share business details with the promoters.
 
The SEBI-appointed panel may also suggest increasing the remuneration of independent directors on the board. Along with that, the committee is planning to make it binding on independent directors to attend at least 50% of the board meetings.

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