New Delhi: The new Company Law could mandate the strength of independent directors on boards of companies be 33%, pitting the government against Sebi which stipulates 50% of directors on boards of listed companies should be independent.
“I think the figure of one-third is sufficient,” Minister of Corporate Affairs, Prem Chand Gupta, told newspersons here on the sidelines of a seminar on accounting standards organised by Assocham.
The J J Irani Committee, formed to suggest the framework of the new law, has recommended that the independent directors should form one-third of the boards.
The minister said that Sebi was a sectoral regulator for listed companies while the law would deal with all companies and would have wide scope of work.
When asked whether a situation could emerge where listed companies comply with Sebi guidelines while unlisted companies could fill 33% of their board positions with independent directors, Gupta refused to comment.
He said the new Company Law was being formulated in consultation with corporates and if they had said that the limit of independent directors on boards should be 25% of the total strength it would have been accepted.
Gupta said the Bill for the new law would be introduced in the winter session and was being formulated by the Law Ministry. “I would have liked to place the Bill in Parliament earlier but as it will replace an old complicated Act, the consultation process is taking time,” he said.
The new law has been in the making for more than two years.
Gupta said basic idea behind bringing a new law was to bring a simple, compact and unambiguous Companies Act, incorporating the international best practices in tune with present day requirements.
He said since the implementation of e-governance programme MCA-21, the life has become easier for corporates and their compliance rate has improved by 50%.
The staff of Registrar of Companies that has been rendered excess by the implementation of the programme would now be utilised for inspections to see that companies are complying with the law.