Prior Approvals are required for any appointments or re-appointments previously rejected by Shareholders: SEBI

The Securities and Exchange Board of India (SEBI) has announced that the appointment or re-appointment of persons previously rejected by shareholders at a general meeting will require shareholder approval.

The Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2022, have been notified by the Board, and they aim to alter the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

In the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, in regulation 17, in sub-regulation (1C), after the words “Board of Directors” the words “or as a manager” shall be inserted; in sub-regulation (1C), the provisos shall be inserted, namely, “Provided that the appointment or a re-appointment of a person, including as a managing director or a whole-time director or a manager, who was earlier rejected by the shareholders at a general meeting, shall be done only with the prior approval of the shareholders: Provided further that the statement referred to under sub-section (1) of section 102 of the Companies Act, 2013, annexed to the notice to the shareholders, for considering the appointment or re-appointment of such a person earlier rejected by the shareholders shall contain a detailed explanation and justification by the Nomination and Remuneration Committee and the Board of directors for recommending such a person for appointment or re-appointment.”

The existing proviso in regulation 40, sub-regulation (1), shall be replaced with the following: “Provided that requests for effecting transfer of securities shall not be processed unless the securities are held in the dematerialised form with a depository: Provided further that transmission or transposition of securities held in physical or dematerialised form shall be effected only in dematerialised form: Provided further that transmission or transposition of securities held in physical or dematerialised form shall be effected only in dematerial The terms “for securities stored in dematerialized mode and physical mode” and “and twenty one days correspondingly” in sub-regulation (3)’s first proviso shall be eliminated.

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