NEW DELHI: Large corporates like HUL and RIL have started making arrangements to comply with regulator Sebi's directive to split the roles of chairman and managing director by April 1, 2020, but several smaller companies are still giving their CMDs tenures beyond the deadline.
As the season of AGMs continues, many companies have sought shareholders' approval for extending tenure of their CMDs, which in several cases will fall foul of Sebi's guidelines for the top 500 listed companies in the country to have a non-executive chairman and a separate person as CEO or Managing Director from April, 2020.
According to officials, Sebi is keen to extend this requirement to all listed companies eventually. For now, it is keeping an eye on top 500 firms which are appointing CMDs beyond the given deadline and will start sending them notices a few months in advance.
The defaulters would face strict penal action which may include barring the concerned chairmen or MDs from holding any board position, officials added.
The companies that have proposed to extend the tenure of their CMDs beyond this deadline include PTC India, whose promoters include a clutch of power sector PSUs, and firms like PVR Ltd, JBM Auto, Gujarat Ambuja Exports and Deepak Fertilisers, as per their respective regulatory filings.
It could not be immediately ascertained whether all of them belong to the top-500 club.
Currently, many companies have the two posts merged as CMD (chairman-cum-managing director), leading to some overlapping of the board and management, which regulators and experts feel could lead to conflict of interest.
PTC India has re-appointed Deepak Amitabh as CMD "with effect from October 16, 2018 till he reaches the age of 62 years — upto October 8, 2022".