Extraterritorial Compliance with Corporate Governance Norms

Shubham Gupta, 4th year law student, Nirma University

*Originally published on India Corp Law

The Securities and Exchange Board of India (SEBI) has elucidated its position with the respect to the extra-territorial application of its corporate governance norms. In a recent informal guidance in the matter of KCP Limited, SEBI interpreted regulation 24(1) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR). The provision stipulates that an independent director of a listed company is to be appointed on the board of directors of an unlisted material subsidiary, whether incorporated in India or not. SEBI found that the provision needs to be adhered to extra-territorially if a foreign subsidiary’s home jurisdiction does not prohibit the compliance thereof. This post seeks to analyze the regulator’s approach towards the extra-territorial application of corporate governance norms.

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