With the aggressive disinvestment of PSUs being planned for the coming months, the government is likely to introduce a fixed time-frame during which the nomination of independent directors should be completed by state-run companies.
“We are looking at shortening the time span of the process (of nominating independent directors),” Secretary in the Department of Public Enterprises Bhaskar Chatterjee told PTI.
He further said the current process is taking a long time. It goes through a number of stages and sometimes the ministries do not respond on time and applications are held up for six to seven months at times.
As per market regulator Sebi’s guidelines, it is mandatory for a company to fulfil the criteria of independent directors before getting listed on the bourses or hitting the capital market.
Under Clause 49 of the Listing Agreement of Sebi, any listed firm must have at least half of its board constituted by independent directors or non-executive directors, if the chairman is an executive.
In case the chairman is non-executive, the rules demand that at least one-third of the board should comprise independent directors.