Corporate Governance Reforms in India: Role Of SEBI and Recent Developments

Published On: February 3rd 2026

Authored By: Priya bharati

GOPAL NARAYAN SINGH UNIVERSITY

Introduction of Corporate Governance:

Let us first understand what corporate governance is in India. Corporate governance in India is the set of guidelines for how a company operates, aiming to ensure transparency, accountability, and ethics for all stakeholders, investors, management, and community, under regulations by bodies like SEBI & MCA, balancing interests to achieve long-term success and build trust, as seen in the Companies Act, 2013.

The Objectives of Corporate Governance in India are:

Maintaining transparency: Build trust with stakeholders, ensure timely disclosure of significant information.
Maintaining accountability: This means those in charge must take responsibility for their actions.
Maintaining fairness: This ensures stakeholders can express concerns and seek remedies for any violation of rights.
Companies are encouraged to address social issues, enhancing their industry image.

SEBI Role in Corporate Governance:

Let us first understand what SEBI.

SEBI means the Securities and Exchange Board of India. India’s primary regulator for the securities market (stocks, bonds, mutual funds, etc.). Its key function is to provide investor protection, regulation, monitoring, etc. It was established in 1992 under the SEBI Act, 1992.[1]

Role [2]of SEBI in Corporate Governance in India

(i) Legal Framework – SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 (LODR): Which mandate transparency, accountability, and investor protection for listed companies through rules on board composition, audit committees, related party transactions, disclosures, and shareholder rights, working along with the Companies Act, 2013.

Key Components & Key Legal Framework of SEBI:[3]

SEBI (LODR) Regulation, 2015
Board Composition
Committees

(ii) Board Composition and Independence[4]: It focuses on having a balanced board with a majority of Independent Directors to ensure objective oversight, challenging executives, and protecting shareholders, alongside necessary expertise and diversity, preventing “groupthink” and conflicts of interest. SEBI also encourages the separation of roles between the chairperson and CEO to avoid conflict of interest.

Independence
Diversity
Expertise
Balance

(iii) Committees for Oversight – SEBI Mandates: Key board committees for corporate governance oversight in listed companies, primarily the Audit Committee, Nomination and Remuneration Committee, and Stakeholders Relationship Committee.

(iv) Disclosure and Transparency: SEBI contributes to enhancing disclosure norms by requiring annual financial reports, voting results of general meetings, and such disclosures ensure that shareholders are well-informed and that companies remain accountable.

(v) Investor Protection – SEBI protects: Investors through strict market regulation, intermediary registration, combating fraud, mandatory disclosures, investor education, and grievance redressal.

(vi) Market Development – SEBI Promotes: Efficient market systems and introduces reforms, like electronic trading, to foster a robust environment.

Recent Development of SEBI in Corporate Governance[5]

SEBI’s recent corporate governance developments focus on enhanced transparency, accountability, and aligning with global standards. In 2024-2025, including:

“Smarter RPT Norms” (turnover-linked transactions)
Higher approvals
“High Value Debt Entity” rules (higher threshold, full governance mandate).

Some Recent Developments[6]

(i) Director Tenure & Approval – The SEBI-Introduced dual approval for independent directors (Board + Shareholders) and cooling-off periods between executive / independent roles. The maximum tenure for an Independent Director (ID) is up to two consecutive terms of five years each. The shareholder approval for the appointment or re-appointment of any director or manager must now be obtained at the next general meeting within three months.

(ii) Strict Approval – SEBI Implemented[7]: Several measures to strict approval and enhance transparency in corporate developments, primarily through stringent disclosure norms. Related Party Transactions (RPTs) include all promoters and groups of promoter entities, regardless of their shareholding percentage, as well as any person or entity holding 10% or more company’s shares. SEBI launched the RPT analysis portal to provide all investors, including retail, with access to RPT governance data for better comparative analysis.

(iii) Asset Sales / Leases – SEBI Mandates[8]: The approval and disclosure requirements for the sale, lease, or disposal of a company’s assets or undertaking. Maintain the shareholder approval and enhanced disclosures. Companies are required to provide detailed disclosures to shareholders regarding the transaction, the objects and the commercial rationale for the asset sale/lease. SEBI introduced rules to prevent companies from bypassing stricter oversight required for schemes of arrangement by using alternative methods.

iv) Board Diversity – SEBI Promotes Board Diversity[9]: By mandating minimums for women directors. The board must have at least one woman director. SEBI implemented a policy for listed companies to create and disclose a formal policy for board diversity. Implemented a rule that optimum boards should have a balance of Executive (ED), Non-Executive (NED) and Independent Director (ID). It enhanced decision-making, improved governance and many more.

Conclusion

SEBI is a crucial aspect of India’s corporate governance by setting stringent rules (like LODR) for transparency, accountability, and investor protection, with recent reforms focusing on independent directors, board diversity, ESG, related party transaction and digital disclosures to align with global standards and boost market confidence. SEBI enhanced transparency & disclosure and stronger board governance, investor protection. Alignment with global standards. SEBI’s reforms are a significant proactive step towards global standards, enhancing transparency, and investor confidence.