The SEBI (Listing Obligations and Disclosure Requirements), 2015 (‘Listing Regulations’) have been amended on August 3, 2021, which will take effect from January 1, 2022. Certain key amendments are:

i.    Shareholder approval by way of a special resolution will be required for appointment, re-appointment, or removal of an independent director from the board of a listed entity;

ii.   The nomination and remuneration committee (‘NRC’) will be required to evaluate the balance of skills, knowledge and experience on the board and basis such evaluation, prepare a description of the role and capabilities required from an independent director. A person recommended for appointment as an independent director on the board will be required to have such capabilities;

iii.  An independent director should not have or had any material pecuniary relationship with the listed entity during the three immediately preceding financial years, instead of previously prescribed two preceding financial years;

iv.   An independent director’s relatives should not: (a) be holding securities or interest in the listed entity, its holding, subsidiary or associate company in excess of the prescribed value; (b) be indebted to such entities or their promoters or directors, in excess of the prescribed value; (c) have given a guarantee or provided security in connection with the indebtedness of any third person, to the aforesaid entities, or their promoters or directors, for the prescribed amounts; and (d) have any other pecuniary relationship with the aforesaid entities for such amounts, as prescribed. Earlier, the nature of pecuniary relationship was not specified;

v.    An independent director or his/her relative should not hold or held the position of a key managerial personnel or is or has been an employee of any company belonging to the promoter group of the listed entity, apart from the aforesaid entities, for the specified period. This restriction will not apply to a relative, who is an employee other than key managerial personnel;

vi.   There is a cool-off period of one year for an independent director, who resigns from the board of a listed entity, to be appointed as an executive / whole-time director on the board of the listed entity, a company belonging to its promoter group or other specified entities;

vii.  Only independent directors forming part of the audit committee will be permitted to approve related party transactions;

viii.  The letter of resignation of an independent director will be required to be disclosed to the stock exchanges;

ix.   A listed entity to obtain approval from shareholders for appointment of a director on the board at the next general meeting or within three months from the date of appointment by the board, whichever is earlier; and

x.    Two thirds of the directors on the NRC will be required to be independent directors (instead of the existing requirement of at least 50% of the directors being independent).