THE department of public enterprises (DPE) is planning to formulate a data bank of directors being employed by central public sector enterprises (CPSEs), in order to put pressure on them to have the stipulated number of independent directors on their board. The need for a data bank was felt by the department as many CPSEs have been facing difficulties getting themselves listed on the bourses as they did not have enough independent directors.
“The data bank will help the government in knowing the status of the board of all the 245 CPSEs and equip it to take action against the erring companies,” an official in the DPE said.
Initial Public Offers (IPOs) of many PSUs, including those of Rural Electrification Corporation (REC) and National Hydro Power Corporation (NHPC), are facing hurdles because the companies do not have the required number of independent directors on board. Even PGCIL’s IPO got delayed due to this.
According to clause 46 of the market regulator SEBI, companies desirous of seeking listing on bourses should have at least 50% independent directors on their board. This rule is applicable for both the private and the public companies. Also, according to the norms of corporate governance prescribed by the government, CPSEs are required to have at least 33% or one third of independent directors on their board.
“Having lesser number of independent directors on the board also results in poor corporate governance. The government needs an authentic data bank to tackle this problem,” the official said.
At present, DPE has got information from around 90-100 companies about their board positions and it hopes to finish the exercise of collecting data from the remaining companies by the end of the fiscal, he added.