Business

33 p.c. independent directors favoured

Special Correspondent

‘No intention to interfere with CEOs’ remuneration package’

— Photo: R. V. Moorthy

ADHERING TO GOVERNANCE: Union Company Affairs Minister, Prem Chand Gupta (left), being welcomed by Assocham President, Venugopal N. Dhoot, at the National Accounting Convention-IV conference on ‘Corporate governance and financial reporting norms’, in New Delhi on Monday.

NEW DELHI: The Union Government on Monday indicated that the number of independent directors (IDs) on the board of listed companies would not be allowed to exceed 33 per cent of the total strength of the board against 50 per cent as was being mandated by the Securities and Exchange Board of India (SEBI). It also said that it had no intention to interfere with the remuneration package of companies’ CEOs.

Spelling out the Government’s position on two major issues at a conference on ‘Corporate governance and financial reporting norms,’ organised by the Associated Chambers of Commerce and Industry of India (Assocham), Corporate Affairs Minister P. C. Gupta even asked, “Had the apex chambers of commerce recommended for 25 per cent of independent directors on the board of listed companies after SEBI insisted that their number should be 50 per cent, the Ministry of Corporate Affairs would accommodate their demand as it firmly holds that there should be no undue regulation imposed on corporate governance.”

He also revealed that the Corporate Affairs Ministry had deferred introduction of the amended new Companies Bill to the winter session of Parliament as it would not be possible to place in the House in the forthcoming monsoon session due to various inter-governmental formalities which will take time for completion. Special provisions were being incorporated in the amended Companies Bill to restrict the number of independent directors in listed companies to 33 per cent of their total board’s strength to let the corporate board function in absolute autonomy, Mr. Gupta said.

The Minister categorically stated that SEBI had the sectoral role to play while the Corporate Affairs Ministry had a wide spectrum and ultimately that would prevail what was being prescribed by the new Companies Bill which after its enactment would ensure that the board of listed companies would have only 33 per cent independent directors and not 50 per cent as was being sought by SEBI. As far as unlisted companies were concerned, he said SEBI’s will for having 50 per cent independent directors in them could continue to prevail although a legal view on it was yet to be given final touches.

Mr. Gupta also said that since his Ministry did not believe to muzzling the corporate sector and favour that it should function independently, there was therefore hardly any need for number of IDs taking to 50 per cent of their board’s strength.

Mr. Gupta said the Government would never interfere with the pay package as well as perks and perquisites, including the salaries of company CEOs to ensure that corporate governance in India follows the highest standards of transparency and accounting norms.

Assocham President Venugopal N. Dhoot welcomed the government’s decision to restrict the size of independent directors to 33 per cent in the board of listed copanies.

© Copyright 2000 - 2009 The Hindu