Regulation 17 - Board of Directors. - Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015

Board of Directors. 17. (1) The composition of board of directors of the listed entity shall be as follows: (a) board of directors shall have an optimum combination of executive and non-executive directors with at least one woman director and not less than fifty per cent. of the board of directors shall comprise of non-executive directors; 1 [Provided that the Board of directors of the 20 [ **** ] top 1000 listed entities shall have at least one independent woman director 21 [ **** ] ; 22 [ **** ] ] (b) where the chairperson of the board of directors is a non-executive director, at least one-third of the board of directors shall comprise of independent directors and where the listed entity does not have a regular non-executive chairperson, at least half of the board of directors shall comprise of independent directors: Provided that where the regular non-executive chairperson is a promoter of the listed entity or is related to any promoter or person occupying management positions at the level of board of director or at one level below the board of directors, at least half of the board of directors of the listed entity shall consist of independent directors. Explanation.- For the purpose of this clause, the expression related to any promoter shall have the following meaning: (i) if the promoter is a listed entity, its directors other than the independent directors, its employees or its nominees shall be deemed to be related to it; (ii) if the promoter is an unlisted entity, its directors, its employees or its nominees shall be deemed to be related to it. 2 [(c) The board of directors of the 23 [ **** ] top 2000 listed entities 24 [ **** ] shall comprise of not less than six directors. 25 [ **** ] ] 10 [ (d) where the listed company has outstanding SR equity shares, atleast half of the board of directors shall comprise of independent directors. ] 3 [(1A) No listed entity shall appoint a person or continue the directorship of any person as a non-executive director who has attained the age of seventy five years unless a special resolution is passed to that effect, in which case the explanatory statement annexed to the notice for such motion shall indicate the justification for appointing such a person.] 15 [ (1B) **** ] 12 [ (1C). The listed entity shall ensure that approval of shareholders for appointment 16 [ or re-appointment ] of a person on the Board of Directors 13 [ or as a manager ] is taken at the next general meeting or within a time period of three months from the date of appointment, whichever is earlier. ] 17 [ Provided that a public sector company shall ensure that the approval of the shareholders for appointment or re-appointment of a person on the Board of Directors or as a Manager is taken at the next general meeting: ] 14 [ Provided 18 [ further ] that the appointment or a re-appointment of a person, including as a managing director or a whole-time director or a manager, who was earlier rejected by the shareholders at a general meeting, shall be done only with the prior approval of the shareholders: Provided further that the statement referred to under sub-section (1) of section 102 of the Companies Act, 2013, annexed to the notice to the shareholders, for considering the appointment or re-appointment of such a person earlier rejected by the shareholders shall contain a detailed explanation and justification by the Nomination and Remuneration Committee and the Board of directors for recommending such a person for appointment or re-appointment. ] 19 [ (1D) With effect from April 1, 2024, the continuation of a director serving on the board of directors of a listed entity shall be subject to the approval by the shareholders in a general meeting at least once in every five years from the date of their appointment or reappointment, as the case may be: Provided that the continuation of the director serving on the board of directors of a listed entity as on March 31, 2024, without the approval of the shareholders for the last five years or more shall be subject to the approval of shareholders in the first general meeting to be held after March 31, 2024: Provided further that the requirement specified in this regulation shall not be applicable to the Whole-Time Director, Managing Director, Manager, Independent Director or a Director retiring as per the sub-section (6) of section 152 of the Companies Act, 2013, if the approval of the shareholders for the reappointment or continuation of the aforesaid directors or Manager is otherwise provided for by the provisions of these regulations or the Companies Act, 2013 and has been complied with: Provided further that the requirement specified in this regulation shall not be applicable to the director appointed pursuant to the order of a Court or a Tribunal or to a nominee director of the Government on the board of a listed entity, other than a public sector company, or to a nominee director of a financial sector regulator on the board of a listed entity: Provided further that the requirement specified in this regulation shall not be applicable to a director nominated by a financial institution registered with or regulated by the Reserve Bank of India under a lending arrangement in its normal course of business or nominated by a Debenture Trustee registered with the Board under a subscription agreement for the debentures issued by the listed entity. (1E) Any vacancy in the office of a director shall be filled by the listed entity at the earliest and in any case not later than three months from the date such vacancy: Provided that if the listed entity becomes non-compliant with the requirement under sub-regulation (1) of this regulation, due to expiration of the term of office of any director, the resulting vacancy shall be filled by the listed entity not later than the date such office is vacated: Provided further that this sub-regulation shall not apply if the listed entity fulfils the requirement under sub-regulation (1) of this regulation without filling the vacancy. ] (2) The board of directors shall meet at least four times a year, with a maximum time gap of one hundred and twenty days between any two meetings. 5 [(2A) The quorum for every meeting of the board of directors of the 26 [ **** ] top 2000 listed entities 27 [ **** ] shall be one-third of its total strength or three directors, whichever is higher, including at least one independent director. Explanation 28 [ **** ] For removal of doubts, it is clarified that the participation of the directors by video conferencing or by other audio-visual means shall also be counted for the purposes of such quorum. 29 [ **** ] ] (3) The board of directors shall periodically review compliance reports pertaining to all laws applicable to the listed entity, prepared by the listed entity as well as steps taken by the listed entity to rectify instances of non-compliances. (4) The board of directors of the listed entity shall satisfy itself that plans are in place for orderly succession for appointment to the board of directors and senior management. (5) (a) The board of directors shall lay down a code of conduct for all members of board of directors and senior management of the listed entity. (b) The code of conduct shall suitably incorporate the duties of independent directors as laid down in the Companies Act, 2013. (6) (a) The board of directors shall recommend all fees or compensation, if any, paid to non-executive directors, including independent directors and shall require approval of shareholders in general meeting. (b) The requirement of obtaining approval of shareholders in general meeting shall not apply to payment of sitting fees to non-executive directors, if made within the limits prescribed under the Companies Act, 2013 for payment of sitting fees without approval of the Central Government. (c) The approval of shareholders mentioned in clause (a), shall specify the limits for the maximum number of stock options that may be granted to non-executive directors, in any financial year and in aggregate. 6 [(ca) The approval of shareholders by special resolution shall be obtained every year, in which the annual remuneration payable to a single non-executive director exceeds fifty per cent of the total annual remuneration payable to all non-executive directors, giving details of the remuneration thereof.] (d) Independent directors shall not be entitled to any stock option. 7 [(e) The fees or compensation payable to executive directors who are promoters or members of the promoter group, shall be subject to the approval of the shareholders by special resolution in general meeting, if- (i) the annual remuneration payable to such executive director exceeds rupees 5 crore or 2.5 per cent of the net profits of the listed entity, whichever is higher; or (ii) where there is more than one such director, the aggregate annual remuneration to such directors exceeds 5 per cent of the net profits of the listed entity: Provided that the approval of the shareholders under this provision shall be valid only till the expiry of the term of such director. Explanation: For the purposes of this clause, net profits shall be calculated as per section 198 of the Companies Act, 2013.] (7) The minimum information to be placed before the board of directors is specified in Part A of Schedule II. (8) The chief executive officer and the chief financial officer shall provide the compliance certificate to the board of directors as specified in Part B of Schedule II. (9) (a) The listed entity shall lay down procedures to inform members of board of directors about risk assessment and minimization procedures. (b) The board of directors shall be responsible for framing, implementing and monitoring the risk management plan for the listed entity. 8 [(10) The evaluation of independent directors shall be done by the entire board of directors which shall include - (a) performance of the directors; and (b) fulfillment of the independence criteria as specified in these regulations and their independence from the management: Provided that in the above evaluation, the directors who are subject to evaluation shall not participate.] 9 [ (11). The statement to be annexed to the notice as referred to in sub-section (1) of section 102 of the Companies Act, 2013 for each item of special business to be transacted at a general meeting shall also set forth clearly the recommendation of the board to the shareholders on each of the specific items. ] **************** NOTES:- 1 Inserted by the SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018, w.e.f. 1.4.2019. 2 Inserted by the SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018, w.e.f. 1.4.2019. 3 Inserted ibid. 4 Inserted by the SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018, w.e.f. 1.4.2020. 5 Inserted by the SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018, w.e.f. the dates specified in the provision. 6 Inserted by the SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018, w.e.f. 1.4.2019. 7 Inserted ibid. 8 Substituted by the SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018, w.e.f. 1.4.2019. Prior to the substitution, sub-regulation (10) read as follows: (10) The performance evaluation of independent directors shall be done by the entire board of directors: Provided that in the above evaluation the directors who are subject to evaluation shall not participate. 9 Inserted ibid. 10. Inserted vide NOTIFICATION No. SEBI/LAD-NRO/GN/2019/28 dated 29-07-2019 11. Substituted vide Notification No. SEBI/LAD-NRO/GN/2020-02 dated 10-01-2020 before it was read as 2020 12. Inserted vide Notification No. SEBI/LAD-NRO/GN/2021/35 dated 03-08-2021 w.e.f. 01-01-2022 13. Inserted vide Notification No. SEBI/LAD-NRO/GN/2022/66 dated 24-01-2022 14. Inserted vide Notification No. SEBI/LAD-NRO/GN/2022/66 dated 24-01-2022 15. Omitted vide F. No. SEBI/ LAD-NRO/GN/2022/76 dated 22-03-2022 before it was read as, 4 [(1B). With effect from April 1, 11 [ 2022 ] , the top 500 listed entities shall ensure that the Chairperson of the board of such listed entity shall - (a) be a non-executive director; (b) not be related to the Managing Director or the Chief Executive Officer as per the definition of the term relative defined under the Companies Act, 2013: Provided that this sub-regulation shall not be applicable to the listed entities which do not have any identifiable promoters as per the shareholding pattern filed with stock exchanges. Explanation - The top 500 entities shall be determined on the basis of market capitalisation, as at the end of the immediate previous financial year.] 16. Inserted vide Notification No. SEBI/LAD-NRO/GN/2023/117 dated 17-01-2023 17. Inserted vide Notification No. SEBI/LAD-NRO/GN/2023/117 dated 17-01-2023 18. Inserted vide Notification No. SEBI/LAD-NRO/GN/2023/117 dated 17-01-2023 19. Inserted vide Notification No. SEBI/LAD-NRO/GN/2023/131 dated 14-06-2023 (shall come into force on the thirtieth day from the date of their publication in the Official Gazette) 20. Omitted vide Notification No. SEBI/LAD-NRO/GN/2024/177 dated 17-05-2024 w.e.f. 31-12-2024 before it was read as, top 500 listed entities shall have at least one independent woman director by April 1, 2019 and the Board of directors of the 21. Omitted vide Notification No. SEBI/LAD-NRO/GN/2024/177 dated 17-05-2024 w.e.f. 31-12-2024 before it was read as, by April 1, 2020 22. Omitted vide Notification No. SEBI/LAD-NRO/GN/2024/177 dated 17-05-2024 w.e.f. 31-12-2024 before it was read as, Explanation: The top 500 and 1000 entities shall be determined on the basis of market capitalisation, as at the end of the immediate previous financial year. 23. Omitted vide Notification No. SEBI/LAD-NRO/GN/2024/177 dated 17-05-2024 w.e.f. 31-12-2024 before it was read as, top 1000 listed entities (with effect from April 1, 2019) and the 24. Omitted vide Notification No. SEBI/LAD-NRO/GN/2024/177 dated 17-05-2024 w.e.f. 31-12-2024 before it was read as, (with effect from April 1, 2020) 25. Omitted vide Notification No. SEBI/LAD-NRO/GN/2024/177 dated 17-05-2024 w.e.f. 31-12-2024 before it was read as, Explanation: The top 1000 and 2000 entities shall be determined on the basis of market capitalisation as at the end of the immediate previous financial year. 26. Omitted vide Notification No. SEBI/LAD-NRO/GN/2024/177 dated 17-05-2024 w.e.f. 31-12-2024 before it was read as, top 1000 listed entities with effect from April 1, 2019 and of the 27. Omitted vide Notification No. SEBI/LAD-NRO/GN/2024/177 dated 17-05-2024 w.e.f. 31-12-2024 before it was read as, with effect from April 1, 2020 28. Omitted vide Notification No. SEBI/LAD-NRO/GN/2024/177 dated 17-05-2024 w.e.f. 31-12-2024 before it was read as, I 29. Omitted vide Notification No. SEBI/LAD-NRO/GN/2024/177 dated 17-05-2024 w.e.f. 31-12-2024 before it was read as, Explanation II - The top 1000 and 2000 entities shall be determined on the basis of market capitalisation, as at the end of the immediate previous financial year.