9-mth breather on clause 49

Mumbai, March 23 | Updated: Mar 24 2005, 06:29am hrs
The Securities and Exchange Board of India (Sebi) has decided to defer the implementation of the revised Clause 49 of the listing agreement by nine months to January 1, 2006.

It will be applicable to all listed companies, whether in the public or private sector.

Addressing a press conference after a three-hour long board meeting, Sebi chairman M Damodaran said, It is expected that listed entities will identify an adequate number of independent directors during this period and have orientation programmes which will enable them to function efficiently at board level.

The objective is to improve governance quality at the board level, he added.

The revised Clause 49 of the listing agreement which was to come into force from April 1, 2005, deals with two major issues: i) making chief executive officers and chief financial officers fully accountable for any financial statements issued by them and ii) stipulating the number of independent directors on the companys board, i.e., 50% of the strength of the board where the chairman holds an executive post and one-third where the chairmans post is non-executive.

Indian companies were facing difficulties in complying with the provision of independent directors and had sought more time to comply.

Mr Damodaran said, there was no proposal to give concessions to PSUs with respect to the provision as PSU boards do not fall in a separate class. Government directors on PSUs represent majority shareholders and hence cant be termed independent, he added.