Mrugan Ltd, a luxury products manufacturing company was planning to raise funds by way of an IPO in next year. As a part of preparation, they appointed Trika Consultants, as advisors to IPO. Trika reviewed the existing b

Provisions of the Companies Act, 2013 that provides for the separation of roles of Chairman and the CEO. First proviso to Section 203(1) of the Companies Act, 2013 provides for the separation of role of Chairman and Chief Executive Officer subject to conditions thereunder. It specifies that an individual shall not be appointed or reappointed as the chairperson of the company, in pursuance of the articles of the company, as well as the managing director or Chief Executive Officer of the company at the same time after the date of commencement of this Act unless, the articles of such a company provide otherwise; the company does not carry multiple businesses. Circumstances as to when the provisions of the Companies Act, 2013 do not apply for the separation of roles of Chairman and the CEO. Second proviso to sub-section (1) of Section 203 of the Companies Act, 2013 provide that above proviso does not apply to public companies having paid-up share capital of rupees one hundred crore or more and annual turnover of rupees one thousand crore or more which are engaged in multiple businesses and have appointed one or more Chief Executive Officer for each such businesses. For the purposes of this, the paid-up share capital and the annual turnover shall be decided on the basis of the latest audited balance sheet.