1. Circular for Implementation of certain Recommendations of
the Kotak Committee through issue of a Circular
Disclosure on Board Evaluation.
Group Governance Unit.
Medium-term & Long-term strategy.
Applicability: The following provisions shall apply to entities whose equity shares are listed on a recognized stock
exchange .
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2. Disclosures on Board Evaluation
Background: The recommendations of KOTAK COMMITTEE are
in the nature of guidance, no specific amendments may be
required to the SEBI LODR Regulations.
However, a guidance note in the nature of a circular should
be issued by SEBI, in this regard stating as under:
“All listed entities may consider the following as a part of
their disclosures on board evaluation:
a) Observations of board evaluation carried out for the year
b) Previous year’s observations and actions taken
c) Proposed actions based on current year observations.”
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3. Disclosures on Board Evaluation
In the background of the recommendation made by Kotak
Committee, the SEBI circular dated 10th May, 2018 states
that:-
Disclosures on Board Evaluation:
The listed entity may consider the following as a part of
its disclosures on board evaluation:
i. Observations of board evaluation carried out for the
year.
ii. Previous year’s observations and actions taken.
iii. Proposed actions based on current year observations
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4. GROUP GOVERNANCE UNIT
Background: In order to improve monitoring of group entities, it is
recommended that where a listed entity has a large number of unlisted
subsidiaries:
1) The listed entity may monitor their governance through a dedicated
group governance unit or Governance Committee comprising the
members of the board of the listed entity.
2) A strong and effective group governance policy may be established by
the entity.
3) However, the decision of setting up of such a unit/committee and
having such a group governance policy may be left to the board of the
listed entity.
Accordingly, it is recommended that guidance to this effect may be
provided by SEBI.
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5. GROUP GOVERNANCE UNIT
In the background of the recommendation made by Kotak
Committee, the SEBI circular dated 10th May, 2018 states
that:-
Where the listed entity has a large number of unlisted subsidiaries:
The listed entity may monitor their governance through a
dedicated group governance unit or Governance Committee
comprising the members of its board of directors.
A strong and effective group governance policy may be established
by the entity.
The decision of setting up of such a unit/committee or having such a
policy shall lie with the board of directors of the listed entity.
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6. DISCLOSURES ON MEDIUM-TERM & LONG-TERM
STRATEGY
Background:
The Committee recommends that in order to provide for disclosures
pertaining to strategy of the entity, especially the medium-term
and long-term strategy (in line with the Committee’s
recommendation that boards devote more time on strategy), a
guidance may be issued by SEBI to listed entities to disclose their
medium and long-term strategy in their annual reports under the
Management Discussion & Analysis Section.
In addition, entities should articulate a clear set of long-term
metrics specific to the company's long term strategy to allow for
appropriate measurement of progress.
However, each entity may define its own time frame with respect to
medium and long-term since it would vary across entities/sectors.
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7. DISCLOSURES ON MEDIUM-TERM & LONG-TERM
STRATEGY
In the background of the recommendation made by Kotak
Committee, the SEBI circular dated 10th May, 2018 states
that:-
The listed entity may consider the following with respect to disclosure of
medium-term and long-term strategy of the entity:
• It may disclose, under the Management Discussion and Analysis
section of the Annual report, within the limits set by its competitive
position, its medium-term and long-term strategy based on a time
frame as determined by its board of directors.
• The listed entity may articulate a clear set of long-term metrics
specific to the company's long term strategy to allow for
appropriate measurement of progress
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8. Thank You
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