Securities and Exchange Board of India’s (SEBI’s) regulations that have called for a separation of roles between the chairperson and managing director. The chairperson is the leader of the board while the managing director (or chief executive officer), leads the management team. One manages the board, the other the company. This is being done to ensure firms have a ‘more balanced governance structure by enabling better and more effective supervision of the management.’ As this change is effective 1 April 2022, we should be prepared for the coming rush to appoint chairpersons emeritus.

However, as the companies act does not recognize chairperson emeritus, these appointments will have to be governed by a formal contract between the company and the individual or under its articles. It will be beneficial to have the role and responsibilities, powers, and liabilities defined in a contract. And as it is an honorary post deserves an honorarium. Nothing more.

Read our blog ‘The coming rush in chairpersons emeritus’ by clicking here