The Securities and Exchange Board of India (SEBI) has issued a Consultation Paper on the Applicability and role of the Risk Management Committee (Consultation Paper). The Consultation Paper proposes certain changes with regard to the provisions regarding the Risk Management Committee under SEBI (Listing Obligations and Disclosure Requirements)Regulations, 2015 (LODR Regulations).
Previously, based on the recommendations of the Committee under Uday Kotak, certain amendments were made to LODR Regulations with respect to the Risk Management Committee.
Now, in view of the risks faced by listed entities, risk management has emerged as a very important function of the board. Further, the Covid-19 pandemic has reinforced the need for a robust risk management framework. At present LODR Regulations specify the role of various board committees of listed entities, defining the role and responsibilities of the Risk Management Committee (except for cyber-security risk) is left to individual boards of listed entities.
In light of this SEBI has felt there is a need to amend the LODR Regulations. The changes proposed are with regard to:
1) Extending the requirement of formation of a Risk Management Committee to a larger number of listed entities (From top 500 to the top 1000 listed entities, on the basis of market capitalization)
2) Clearly defining the role and responsibilities of the Risk Management Committee
3) Increasing the frequency of meetings from once a year to twice a year and also defining a quorum for the meetings of the Risk Management Committee.
Public comments/views on the proposed amendments are invited by SEBI and may be sent by email sent in the following format by email to Ms. Amy Durga Menon, Deputy General Manager, at amydurga@sebi.gov.in, Ms. Ishita Sharma, Manager, at ishitas@sebi.gov.in and Ms. Sonal Pednekar, Manager at sonalp@sebi.gov.in by December 10, 2020.
| Name of the person/entity proposing comments: | |||
| Sr. No. | Pertains to Regulation/sub-regulation/schedule/clause/sub-clause (as applicable) | Proposed /suggested changes | Rationale |
The details of the amendments proposed are at Annex I of the Consultation Paper.
Source : Securities and Exchange Board of India
