No More Permanent Board Seats for the Promoters of Listed Companies
Promoter directors in India will no longer enjoy permanent board seats. As the new LODR (Listing Obligation and Disclosure Requirements) regulations have come into effect on 13th July 2023. From 1st April 2024, all categories of directors will be mandated to seek periodic approval from shareholders. As of now the non-executive, Non-Independent directors who are not liable to retire on rotation were not required to seek shareholders’ approval. With new rules in place, all directorships would be put up for shareholders’ approval every five years. Any director whose appointment or reappointment has not been backed by a shareholders’ approval in the last five years as on April 1, 2024, will have to seek a vote of approval in the first general meeting to be held.
There are exceptions to the new rule as well. Directors appointed by a court or a tribunal or the nominee directors of government or financial sector regulators or the directors appointed by a financial institution regulated by the RBI, will not be covered under this rule.
