The government on Wednesday said that the Securities and Exchange Board of India (Sebi) guidelines which require listed companies to meet corporate governance norms for best practices in management may now be extended to unlisted companies as well.
“We are harmonising. The appropriate best practices that are seen in Clause 49 (of Sebi’s Listing Agreement) will have to be brought in the new Companies Bill,” Corporate Affairs Minister Salman Khurshid told reporters when asked whether the provisions of this clause would be extended to unlisted companies as well.
Best practice standards have to be imposed on everyone appropriately, he told reporters on the sidelines of an Assocham event on accountability and transparency.
“But the compliance cost has to be kept in mind, looking at different levels and sizes of companies,” the Corporate Affairs Minister said.
The new Companies Bill was tabled in Parliament last year and is currently with the Standing Committee.
Clause 49 of Sebi’s listing agreement requires companies to fill half of their board with independent directors if the chairman is executive and one-third if the chairman is non-executive.
The Companies Bill 2009 has slightly different norms for listed companies.
Clause 49 also requires companies to establish and maintain internal controls, submit a quarterly compliance report to stock exchanges, enclose a separate section on corporate governance in annual reports and have an audit committee.
Khurshid said the best of these provisions may be extended to unlisted companies as well.