The corporate governance norms announced by the Securities and Exchange Board of India (Sebi) go beyond those mentioned in the Companies Act. Sebi has pushed for better corporate governance of listed companies through measures such as the need for a succession policy, prior approval of the audit committee for all related-party transactions and e-voting facility for all shareholder resolutions by the top 500 companies (by market capitalisation). All these measures have either not been specified in the Companies Act or haven’t been made mandatory. The stock market regulator has encouraged boards to put a succession plan in place so that there is a clear second line of leadership, should the top one fall vacant. The Companies Act doesn’t talk about the need for a succession plan. Sebi has also talked about the audit committee looking into related-party transactions, or deals in which promoters may stand to benefit. The Companies Act, however, doesn’t mention such a process. Sebi has also urged a provision be made to train independent directors and make it compulsory for the 500 most valuable companies listed on stock exchanges to allow their shareholders to decide on resolutions through e-voting, which is not mandatory under the Companies Act.

(Business Standard)