The government is yet to tighten corporate governance guidelines for public sector enterprises. This, despite the fact that 32 listed central public sector enterprises (CPSEs) do not have the requisite number of independent directors. Recently, several CPSEs had also drawn flak from the Comptroller & Auditor General of India for flouting corporate governance norms.
In fact, the Department of Public Enterprises was to revise the initial guidelines for CPSEs, listed or not, by June 2008, a year after they were issued. The exercise is still to be carried out.
The guidelines were modeled on Clause 49 of the listing agreement, issued by the Securities and Exchange Board of India (Sebi), covering issues like composition of the board of directors, setting up of audit committees, role and powers of audit committees etc. ?These guidelines are being issued for an experimental phase of one year. Suitable improvements would thereafter be made in these guidelines in the light of experience gained,? the DPE had said while issuing the guidelines in June 2007.
Although more than a year has passed since the time for the guidelines to be revised, the department is still working on drafting new ones. On being asked about the progress, a senior official of the department said on the condition of anonymity, ?It is a long procedure and its completion depends on the reports submitted by CPSEs. We are working on it.?
The department had directed all CPSEs to follow the guidelines to protect stakeholders? interest. However, according to latest government data, 32 listed PSUs, including ONGC, MMTC and SAIL, do not have the required number of independent directors on their boards. A CAG report tabled in Parliament in July also highlighted the names of State Trading Corporation, MTNL, and Nalco in the list of firms flouting the norms. Sebi norms stipulate that a listed firm has at least half of its board constituted by non-executive directors if the chairman is an executive. In case of a non-executive chairman, at least one-third of the board should comprise of independent directors.