The separation of the post of the chairman and managing director is not meant to weaken the position of promoters but to improve corporate governance, Ajay Tyagi, chairman of the Securities and Exchange Board of India, said on Tuesday.

Sebi’s new framework would also help to reduce excessive concentration of authority in a single individual, he said. Besides, the separation of roles would provide a better and more balanced governance structure. Tyagi was speaking at virtual event organised by industry chamber CII on corporate governance.

Around 53 per cent of the top 50 listed companies have separated their top positions of chairman and managing director. The companies have one more year to comply with the norms.

Tyagi also stressed on the need to make adequate disclosure to all stakeholders by the listed companies during the Covid-19 situation. The entities need to disclose the financial impact of the pandemic and should not resort to selective disclosure.

He spoke of a fine balance between the roles and responsibilities of controlling shareholders and minority shareholders, so that the latter do not misuse the power given to them for protection of their rights.

He said the regulator has failed to ensure the independent directors operate without the influence of promoters and protect the interest of small shareholders, which is at the core of corporate governance.

“I must admit that notwithstanding various efforts made in the past, we are yet to get ideal solutions to issues such as ‘ensuring independence of independent directors’, ‘selecting the best suited persons as independent directors’, ‘making their role more effective and meaningful’, etc,” he said. It’s the regulator’s endeavour to bring in greater balance, transparency and quality in the selection of independent directors and functioning of corporate boards.

He spoke of a fine balance between the roles and responsibilities of controlling shareholders and minority shareholders, so that the latter do not misuse the power given to them for protection of their rights.

CII president Uday Kotak said capital markets are the engine for India’s growth, and policymakers across the spectrum need to keep in mind that this needs to be nurtured and sustained.