The Securities and Exchange Board of India (Sebi) on Thursday recommended setting up of 'Governance Committee' within listed entities which have a large number of unlisted subsidiaries.
According to a SEBI circular, listed entities may monitor "their governance through a dedicated group governance unit" which shall comprise of Board members.
"A strong and effective group governance policy may be established by the entity, " the market regulator said in a circular.
"The decision of setting up of such a unit or committee or having such a policy shall lie with the board of directors of the listed entity. "
The circular further said that listed entities may "disclose, under the 'Management Discussion and Analysis' section of the annual report, within the limits set by its competitive position, its medium - term and long - term strategy based on a time frame as determined by its board of directors".
"The listed entity may articulate a clear set of long - term metrics specific to the company's long term strategy to allow for appropriate measurement of progress. "
The recommendations have been suggested by the 'Committee on Corporate Governance' under the Chairmanship of Uday Kotak.
On May 9, the regulator in a notification mandated listed entities on some of the suggestions made by the Committee.
SEBI has mandated top 500 listed entities on the basis of market capitalisation, as at the end of the immediate previous financial year to appoint at least one woman independent director by April 1, 2019, and in the top 1, 000 companies by April 1, 2020.
It has also called for separate positions of MD and Chairperson in the top 500 companies by April 1, 2020.
In March, the securities market regulator approved most of the measures suggested by the Kotak Committee for enhancing corporate governance, along with steps to strengthen algorithmic trading and encourage participation through the MF route.