Shyam asked 3 years ago
Sir As per lodr we select a board of directors sir it is clearly mentioned that the chairperson should not be related to the non executive Director and not related to Managing Director and share this has this provision has been deferred from 1st of April 2022
But case study mention this answer that amendment is applicable so what we have to do
Ravi Staff answered 3 years ago
Regulation 17 of LODR
Requirement
With effect from April 1, 2020, the audit shall ensure that the Chairperson of the board of the top 500 listed entities is –
a) a non-executive director.
b) not related to the Managing Director or the Chief Executive Officer as per the definition of the term “relative” defined under the Companies Act, 2013.
Non applicability of above
It may be noted that this provision shall not be applicable to the listed entities which do not have any identifiable promoters as per the shareholding pattern filed with stock exchanges.
No identifiable promoters means company has proved that it is not run by promoters or their families, they have distanced themselves from day to day management and now company is being run by professionals. This shows promoters are now operating like investors. As they are not involved actively in company management, chances of biasness reduces hence such companies are given exemption with respect to chariperson.
How to determine Top 500 entities
It may also be noted that the top 500 entities shall be determined on the basis of market capitalisation, as at the end of the immediate previous financial year.
Ravi Staff answered 3 years ago
From above you will get clarity
in given case though he is non executive director but still he is related to promoter hence he cannot become chairperson.
and they have not probed that there is “no identifiable promoter”
Ravi Staff answered 3 years ago
On 10th of January. This provision related to chairperson was deferred till 1st April 2022 but this change is not relevant for July exams. So for July exams we should consider applicability of chairperson related regulation from Nov 21 we can consider deferral.