Succession Planning of Key Business Leaders

Background

Globally, the standards on succession planning differ in various jurisdictions. In the United States, though succession planning is not mandated, shareholders can require companies to disclose and even put to vote the succession plan of the listed companies.

The UK Corporate Governance Code recommends that ‘the Board should satisfy itself that plans are in place for the orderly succession for appointments to the Board and to senior management.

Succession planning is one of the important elements of corporate governance. Board of a listed company is required to ensure that plans are in place for the orderly succession for appointments to the Board and senior management. Further, the viability of mandatory disclosure of succession planning to Board/Shareholders at periodic intervals may also be examined.

In today’s highly competitive global marketplace, Companies that continuously cultivate the next generation of leaders enjoy a business advantage.

“Talent” is a company’s most important differentiator; and it’s not just about a handful of leaders at the top. Excellence across a range of skills and functions creates a real competitive advantage and sudden gaps or departures can quickly erode it. That’s why smart companies are building pools of talent that are deep, rich, and wide.

Regulatory Requirements

As per SEBI’s revised Clause 49 of the Equity Listing Agreement on Corporate Governance, Board of a listed company shall satisfy itself that plans are in place for orderly succession for appointments to the Board and to senior management. Moreover, selecting, compensating, monitoring and when necessary, replacing key executives and overseeing succession planning has become one of the key functions of the Board.

Penalty for Non Compliance

Generic provision of penalty of Rs. 2,000 per day till the non-compliance continues.

How DHC-Desai Haribhakti can help you?

DHC-Desai Haribhakti can carry out effectiveness review of Succession Planning initiatives taken by a Company.

DHC-Desai Haribhakti has been in the space of advising and assisting Human Resources, which encompasses broad range of services such as defining of KRAs, KPIs, team sizing and writing detailed guidelines on policies and procedures for entire HR function. With a strong presence in all the sectors, DHC-Desai Haribhakti possess an unparalleled know-how in the risk consulting for various companies operating in wide space. Our Team comprises of good blend of people from functional and technical background most of whom are CAs and/or MBAs. We adopt a multidisciplinary risk based approach for performing succession planning assignments with people from domain knowledge assisting and overseeing the succession planning assignments.

Effectiveness exercise review will enable management to provide comfort to the Board and Shareholders of the Company with respect to compliance of the Corporate Governance norms.

Contact us for more information on Succession Planning:

Address:

701, 7th Floor, Leela Business Park, Andheri Kurla Road, Andheri (E), Mumbai-400059.

Tel: +91 (22) 6672 9999 :   Email: info@dhc.co.in

Disclaimer

Desai Haribhakti Consulting Private Limited (DHC) is company incorporated in India. DHC is India’s largest domestic accounting firm.

This publication has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. The publication cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained therein without obtaining specific professional advice. Please contact DHC to discuss these matters in the context of your particular circumstances. DHC, its partners, employees and associates do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this publication or for any decision based on it.