Reacting with alacrity to the FE report that a third of listed public sector units (PSUs) do not have the requisite number of independent directors on their boards, the department of public enterprises (DPE) is set to send stern missives to the PSUs? administrative ministries to ensure that they clear the appointments in time. The ministries at the receiving end would include finance, steel, petroleum & natural gas, power, commerce, telecom and defence.
?Generally, it (appointment of independent directors) takes anywhere between six months and two years. We are very much concerned about the lower number of independent directors on the boards of many central PSUs, and we have to hurry up the process of appointment of the required number very soon as these firms face de-listing for flouting the Sebi norms,? DPE secretary Bhaskar Chatterjee told FE.
The DPE has also asked the Public Enterprises Selection Board to expedite the process of appointing non-executive directors so that PSUs won?t face a threat of delisting from the stock exchanges. According to clause 49 of the listing agreement with stock exchanges, effective January 2006, at least a third of the board must be made up of independent directors.
As FE reported on Friday, over a third of listed PSUs do not meet the norms, including bluechip firms such as Power Finance Corporation, Oil & Natural Gas Corporation, Steel Authority of India Limited, Mahanagar Telephone Nigam Ltd, Bank of India and Punjab National Bank. PFC and ONGC have squarely blamed the status quo on the dithering of power and oil ministries.
Accepting that administrative ministries sit on independent directors? appointments, the DPE secretary said, ?It is not the entire government but the respective administrative ministries that are at fault. They are delaying the recommendations of people who can be appointed as independent directors to PESB. If they give the list of selected names, it wouldn?t take any time to appoint them on the board.?
?We are analysing the situation and are preparing the list of ministries at fault. I will write letters to them within the next 15 days to do the needful. The ministries should act responsibly,? Chatterjee told FE.
