The new company law could mandate that the strength of independent directors on the boards of companies should be 33%, pitting the government against market regulator Securities and Exchange Board of India (Sebi), which stipulates that 50% of directors on boards of listed companies should be independent.
“I think the figure of one-third is sufficient,” minister for corporate affairs Prem Chand Gupta said.
The J.J. Irani Committee, formed to suggest the framework of the new law, recommended that the independent directors should form one-third of the boards.
The minister said 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 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 of Parliament.