Only Independent Directors to approve related party transactions vide SEBI (Listing Obligations and Disclosure Requirements) (Third Amendment) Regulations, 2021

The Securities and Exchange Board of India has passed SEBI (Listing Obligations and Disclosure Requirements) (Third Amendment) Regulations, 2021 on August 3, 2021. These Regulations amend the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

 

Key amendments made by the Regulations are:

  1. The amendment states that the listed entity shall ensure that approval of shareholders for appointment of a person on the Board of Directors is taken at the next general meeting or within a time period of three months from the date of appointment. [ 17, sub clause (1C)]
  2. Related party transactions shall be approved by only those members of the audit committee, who are independent directors. [ proviso to Reg. 23]
  3. It is also provided that the appointment, re-appointment or removal of an independent director of a listed entity, shall be subject to the approval of shareholders by way of a special resolution. [ 25, sub clause (2A)]
  4. If any independent director resigns from a listed entity, he/she shall not be appointed as an executive/whole time director on the board of the listed entity, its holding, subsidiary or associate company or on the board of a company belonging to its promoter group, unless a period of one year has passed from the date of resignation as an independent director. [ 25(11)]

 


*Tanvi Singh, Editorial Assistant has reported this brief.

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