In a clear sign that the Centre?s disinvestment programme would be expanded substantially next fiscal, the government has decided to set an early deadline for central public sector enterprises (CPSEs) to reorganise their boards to meet Clause 49 of Sebi?s listing agreement.
?We are having a re-look at the process of appointment of independent directors in public sector firms. We have decided to fix a mandatory timeframe for making these appointments. For this, we are in talks with PESB (Public Enterprises Selection Board),? Department of Public Enterprises secretary Bhaskar Chatterjee told FE.
In normal course, the appointment of independent directors to a PSU board takes more than six months, due to the formalities involved. The move is to cut down the process and also force CPSEs to comply with Clause 49. Chatterjee said this (fixing the deadline) would be an enabling measure for faster disinvestment of CPSEs.
As per the norms mandated by the market regulator since January 2006, a listed firm must have at least half of its board formed by independent directors if the chairman is executive. In case the chairman is non-executive, independent directors would constitute at least one-third of the board.
At present, around 35% of listed CPSEs don?t have the required number of independent directors on their boards, leave alone those which are unlisted. Even many bluechips don?t have the requisite strength of independent directors on their boards.
?We are under tremendous pressure to shorten the time period (for listing). I hope the timeframe will be decided soon,? Chatterjee added. NHPC Ltd, which was listed on Bombay Stock Exchange in September 2009, had faced a delay of more than a year in listing due to shortage of independent directors on its board.
The government had announced a plan to list all the profit-making CPSEs and also to ensure that the listed ones have at least 10% public shareholding. It is believed to have prepared a list of 60 CPSEs that would issue shares to the public.
While NTPC Ltd, Rural Electrification Corporation, Steel Authority of India, NMDC Ltd and Engineers India are going for follow-on public offers, Coal India Ltd, Satluj Jal Vidyut Nigam and United Bank of India are about to be listed.
