New Delhi: Market regulator, the Securities and Exchange Board of India, or Sebi, on Wednesday ruled out relaxing norms on independent directors for public sector companies, saying corporate governance norms help boost confidence of investors in corporate India.
Opposing the views of Oil and Natural Gas Corp. Ltd (ONGC) chairperson R.S. Sharma that the norms, as contained in Clause 49 of the listing agreement, come in the way of a level playing field between public sector units (PSUs) and private players, Sebi chairperson M. Damodaran said they are same for all companies.
Under Clause 49, it is binding on the listed companies to fill 50% of their boards with independent directors in case they have an executive chairperson and one-third in case they have a non-executive chairperson. “The solution suggested that corporate governance requirement should be less for PSUs is something I cannot persuade myself to agree with,” Damodaran said at a conference on corporate governance. Notwithstanding the difficulties that PSUs face, a remedy must be found somewhere else and not in diluting corporate governance norms, he added.
Earlier, at the seminar organized by the Institute of Company Secretaries of India, Sharma said PSUs are already over-regulated because they are accountable to Parliament, the comptroller and auditor general, Central Vigilance Commission and now the Right to Information Act.
He said Sebi should consider the Irani committee report to reduce the number of independent directors to one-third of the total board strength for the PSUs.
Sharma said the oil company was unable to comply with Clause 49 because it requires government approval, which takes a long time. ONGC has four independent directors out of the board strength of 15, he added.