Capital markets regulator Sebi has called for greater regulatory authority in the governance of listed companies. It has asked the ministry of corporate affairs to expand its ambit on all matters of regulating listed companies in the amendments to the Companies Act. In particular, it wants power to regulate matters related to issue and transfer of securities and non-payment of dividends by listed companies, said a senior official in the regulator.

“We have asked the ministry of corporate affairs to broaden the scope of section 55 of Companies Act, 1956, which is now clause 22 of Companies Bill,” said Usha Narayanan, executive director, Sebi, at an Assocham event in the capital.

She said that Sebi was working on an alternative model of corporate governance and said such norms for listed and to-be-listed companies should be completely in Sebi’s domain.

Corporate governance is maximising the shareholder’s value in a corporation while ensuring fairness to all stakeholders, customers, employees, investors, and other stakeholders, she said.

Parliament’s standing committee on finance, which studied the draft Companies Bill, recognised the need for sectoral regulators having stringent rules than what is contained in the parent Companies Act governs all companies.

Under the present system, unlisted companies are governed by the norms prescribed in the Companies Act, while listed companies have to also follow clause 49 of Sebi’s listing agreement.

Regarding jurisdiction on end use of IPO funds, Narayanan said, it is completely in the domain of the ministry of corporate affairs as Sebi deals with disclosures.

Speaking to reporters after the function, Narayanan said that the regulator may give its final view on the Takeover Code for merger and acquisition at its board meeting scheduled later this month.

“We are in consultation process. Probably we will get it (Takeover Code) through in the next Board meeting,” she said.

As per the takeover guidelines proposed by a Sebi Panel headed by C Achuthan in July last year, an entity buying 25% stake in a company will need to make an open offer to the rest of the shareholders.

Under the existing norms, the trigger point for making an open offer to shareholders was acquisition of 15% equity in the target company through open market or through a negotiated deal.

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February 2024