The new norms were cleared by the Sebi board here today and the relevant provisions would be incorporated in the listing agreement soon, Sebi Chairman U K Sinha said.
Speaking to the reporters after meeting of the board, which also cleared a long-term policy for mutual funds, Sinha also said that any decision on the lapsed ordinance that granted greater powers to Sebi needs to be taken by the government.
The approval by Sebi board to the new corporate governance norms follows months-long discussion among various stakeholders on draft regulations released last year.
The new norms seek to check excessive salaries paid to top executives of listed companies by requiring them to justify such payments, as also all related party transactions with entities linked to promoters and directors.
The companies would also need to adopt a whistle-blower policy for employees, while the number of directorship a person can hold on company boards would be capped, among various other measures to safeguard the interest of minority shareholders.
They also seek to bring in a greater alignment of CEO salaries with the performance and goals of the company, while requiring disclosure of ratio of remuneration paid to each of their directors and their median staff salary.
Similar provisions have been made in the new Companies Act.
Sebi had earlier said that "on average, the remuneration paid to CEOs in certain Indian companies are far higher than the remuneration received by their foreign counterparts and there is no justification available to that effect".
Among other major decisions, Sebi board today cleared the much-awaited long term policy for mutual funds, which includes various proposals including potential tax benefits, for the future growth of the sector.