The Institute of Company Secretaries of India (ICSI) has recommended to the Government that the maximum number of listed companies where one can be a director be restricted to seven. ICSI has also mooted capping the tenure of independent directors at six years. In its report on ‘Strengthening Corporate Governance Framework’ submitted to the Corporate Affairs Minister, Mr Salman Khursheed, ICSI suggested a clear demarcation of the roles and responsibilities of the Chairman of the Board and that of the Managing Director/CEO.
Disclosing this, Mr Vinayak S. Khanvalkar, Vice-President, ICSI, told presspersons here that the roles of the Chairman and CEO should be separated to promote a balance of power. He said Clause 49 needs to be amended to specify that independent directors should have attributes such as integrity and the ability to understand financial statements.
Proposing a limit on the number of Directorships, the ICSI said, “If an individual is a managing or whole-time director in a listed company, the number of companies he/she can serve as non-executive director, be restricted to 10. The number of listed companies where he/she can serve as a non-executive director should be restricted to two.” The ICSI has recommended mandatory rotation of the audit partner and firm. While the audit partner should be rotated every three years, the audit firm should be rotated every six years. ICSI has mooted the compulsory training of directors and an annual performance evaluation of the board. It said companies should release a Directors’ Responsibility Statement to ensure they are complying with all the applicable laws. Other suggestions include listed companies going in for a mandatory Secretarial Audit and constituting an Investor Relations Cell. The Ministry has sought comments on the ICSI report by December 14.