In a recent announcement, state-owned life insurer Life Insurance Corporation (LIC) revealed that its chairman, Siddhartha Mohanty, has been redesignated as the chief executive officer and managing director, effective from June 30, 2024. This move by LIC has sparked speculation about whether the company will appoint a new chairperson.
The capital market regulator has been advocating for large listed companies to have separate individuals serving as chairperson and CEO in order to enhance corporate governance. The regulator believes that having a non-executive chairperson, who heads the board of directors, will ensure the independence of the board. In 2018, the Securities and Exchange Board of India (SEBI) amended the Sebi (Listing Obligations and Disclosure Requirements) Regulations, 2015, making it mandatory for the top 500 listed companies to appoint a non-executive director as the chairperson, who should not be related to the managing director or the CEO.
However, in 2022, the SEBI revised its earlier directive and made it optional for the top 500 listed companies to split the positions of chairman and CEO. The Companies Act, 2013, also allows for the separation of the chairperson and CEO roles, but companies can deviate from this provision if permitted by their articles of association.
