Consultation Paper on Corporate Governance norms for listed entities

Brief Overview:

A consultation paper has been floated to make certain significant regulatory changes to the corporate governance of listed entities.

Technical Details:

Key changes proposed by way of amendments are:

1)    Disclosure of certain types of agreements:

To ensure that any agreement which impacts management or control of a listed entity or creates a liability on the listed entity (whether executed by the listed entity or by its promoters or others) is required to be disclosed. Additionally, before entering into such agreements, they shall be approved by the shareholders through a special resolution. The agreements should be disclosed in the annual report of the entity from 01st April 2023. If there are outstanding agreements which satisfy the clause, then those have to be disclosed to the stock exchanges before 30th June 2023 and shall be ratified by the shareholders in the first general meeting of the entity post 01st April 2023.

2)    Review of special rights provided to certain shareholders:

To address the concern regarding certain shareholders having perpetual special rights, the Securities and Exchange Board of India (“SEBI”) has proposed that any such special right shall require shareholder approval every 5 years from the date of such right being granted. Existing special rights shall be renewed within 5 years from the date of amendment to SEBI LODR.

3)    Addressing the issue of board permanency:

SEBI has proposed to implement dual measures with respect to permanent board members for better corporate governance.

(a)   If a director has not been appointed or reappointed subject to shareholders’ approval as on 31st March 2024 in the preceding 5 years, i.e., from 01st April 2019, the approval must be taken in the first general meeting to be held post 01st April 2024; and

(b)   From 01st April 2024, the entity shall ensure that all directors serving or appointed on the board is put to shareholders’ approval at least once in 5 years.

The above provisions would not be applicable if the director is appointed by a Court or Tribunal.

4)    Sale, disposal or lease of assets outside of “Scheme of Arrangement” framework:

To strengthen the framework of slump sales and safeguard the interest of minority shareholders, the introduction of the following provisions have been proposed in SEBI LODR.

(a)   Mandating the disclosure of objects and rationale for such sale or disposal of assets; and

(b)  In addition to the special resolution to be passed under the Companies Act, 2013, the same can be acted upon only if the votes cast by the public shareholders are more than the number of votes cast by the public shareholders against it.

The above changes have been proposed by the Securities and Exchange Board of India vide their consultation paper dated 21st February 2023 titled ‘Consultation Paper on Strengthening Corporate Governance at Listed Entities By Empowering Shareholders – Amendments To The SEBI (LODR) Regulations, 2015’.

Comments are invited till 07th March 2023.

For further details, please see:

SEBI | Consultation Paper – LODR

For any queries / clarifications, please feel free to ping us and we will be happy to chat:

 Ms. Apurva Kanvinde(
 Mr. Smit Parekh (

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