Page 16 - Banking Finance August 2021

ROUNDUP

SEBI tightens norms on in- sidiary, associate company or any need to be addressed. The technical
group company. It also said that if key details will be worked out and a con-
dependent directors managerial personnel, their relative, or sensus is expected by October, it
In an attempt to give more power to an employee of the promoter group added.
non-promoting shareholders in a com- companies wants to be an independent
pany, markets regulator Sebi said that director, there should be a cooling off SEBI looks to broaden
two-thirds of the members of the nomi- period of three years.
nation & remuneration committee reach of capital markets
(NRC) and the audit committee (AC) of India joins leading econo- The Securities and Exchange Board of
the board of a listed company should India (Sebi) plans to rope in payment
be independent directors. Currently, mies to back minimum banks to handle the application process
rules say that a majority of the mem- corporate tax plan for initial public offerings (IPOs) in or-
bers of these two important commit- der to broaden the reach of capital
tees of the board should be indepen- India joined the world's leading econo- markets. The regulator also plans to
mies in endorsing a plan to force mul-
dent directors. allow small finance banks (SFBs) to pro-
tinational companies to pay a global
In board meeting, Sebi also said that an minimum corporate tax rate of at least vide the so-called application supported
appointment of an independent direc- 15 per cent and pledged to work for by blocked authorisation (ASBA) for
tor should be approved by shareholders the deal's final approval in October. IPOs.
within three months or through an The ASBA facility blocks the IPO appli-
AGM, whichever is earlier. The appoint- This historic agreement - announced in cation money in the bank account till
ment should be through a special reso- Paris under the aegis of OECD - saw as the time of allotment. However, Sebi
lution, one that would need the nod of many as 130 countries (out of the 139 has reservations in permitting mobile
involved in the talks) back the plan
at least 75% of the shareholders. wallets to be part of the IPO process,
(OECD/G20 Inclusive Framework Tax
Sebi further said that if an independent Deal), which has both elements of the said two regulatory sources.
director resigns from the board, the agreement forged by the G7 in June.
company should disclose to the ex- IMF's Expansion of re-
changes the full content of the letter However, there are some special rules
of resignation of that director. It said for certain sectors and companies serves to be completed
that all related-party transactions added to it. Once implemented, it is The International Monetary Fund's
expected to prevent globally operating
should be cleared only by the indepen- executive board discussed a proposed
companies from shifting to low- tax
dent directors on the audit committee. $650 billion expansion of its emergency
regions to secure extended profits. reserves, marking the next step in a
According to Sebi, among other quali- Countries that have agreed to the lat-
fications, an independent director is a est plan collectively represent more process expected to be completed in
person who is not a promoter or a rela- than 90 per cent of the world's GDP. August, the IMF said in a statement.
tive of the promoter of the company, The new allocation of the IMF's re-
its holding, subsidiary or an associate The proposed solution consists of two serve currency, or Special Drawing
components: Pillar One, which is about
company. The person should also be Rights, would be the largest in its his-
reallocation of
qualified to add some value to the tory, IMF spokesman Gerry Rice said in
company. The person, other than re- an additional share of profit to market a statement. It is aimed at helping the
ceiving director's remuneration, should jurisdictions, and Pillar Two, of mini- most vulnerable members of the glo-
have no other pecuniary relationship mum tax and subject to tax rules. The bal lender weather the COVID-19 pan-
with the company during the two im- deal is expected by October when G20 demic and its economic fallout.
mediately preceding financial years. leaders meet in Rome. Implementa- G7 leaders this month welcomed the
tion may happen in 2023.
Sebi also introduced a cooling off pe- proposed expansion of the IMF's emer-
riod of one year for an independent An official release said some significant gency reserves, and backed a global
director becoming a whole-time direc- issues, including share of profit alloca- target of providing $100 billion to the
tor in the same company, holding, sub- tion and scope of subject to tax rules, most vulnerable countries.

16 | 2021 | AUGUST | BANKING FINANCE