The Ministry of Company Affairs has approached the Department of Economic Affairs (DEA) in the Finance Ministry for an early solution on the issue of board composition for listed entities, particularly the public sector undertakings (PSUs).
With less than three months to go for the Securities and Exchange Board of India (SEBI) deadline for compliance with the revised norms of corporate governance, the issue of independent directors is haunting India Inc.
SEBI had deferred the implementation of amended Clause 49 of the Listing Agreement to January 1, 2006, giving the companies enough time to get ready for compliance. The PSU companies in sectors such as power and fertilisers had approached the Company Affairs Ministry to clarify whether Government nominees could be treated as independent directors, and whether the Ministry had prescribed any limit on the number of such directors on a company board. The Petroleum Ministry had also taken up the issue with the Finance Ministry, urging that Government directors be accorded the status of an `independent director.'
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