The government?s plan to mobilise more than Rs 40,000 crore this financial year through sale of stakes in state-owned companies may hit a speed-breaker due to non-compliance of these companies with Clause 49 of the listing agreement.

Listed PSUs like SAIL, Power Grid and Shipping Corporation awaiting Cabinet approval for follow-on public offers (FPOs) and those with government approval already in place like Coal India and Engineers India will have to appoint new independent directors and form audit committees before they get Sebi approval to tap markets.

Clause 49 of Sebi?s listing agreement, inter alia, stipulates that independent directors should constitute at least 50% of the board of a listed company with an executive chairman. It is also mandatory to have audit committees with at least three directors, of which two-third should be independent. According to a disinvestment department official, under the current circumstances, it will take a minimum of six months to make these companies Clause 49-compliant.

Finance ministry officials cite various instances which show the time lag in making a company Clause 49-compliant.

Three of the four PSUs which have been given Maharatna status ? ONGC, SAIL and IOC ? continue to be deprived of the enhanced powers the title would bring them, due to of their lack of compliance with Clause 49. Only NTPC has started enjoying the enhanced autonomy from Maharatna title.

Towards the end of last fiscal, the listing of government-owned United Bank of India had to be postponed twice since the government was unable to appoint independent directors on the board. ?Finance ministry had to intervene on the issue and Sebi gave an exemption to the bank to list, although it was not Clause 49-compliant,? said a finance ministry official. He added that ?in future, the government will not seek such exemptions from the central bank as the PMO has directed that with the intention of listing being greater transparency and improved corporate governance practices, no exemptions should be sought.?

Engineers India, which filed the draft red herring prospectus with Sebi on June 22 will need to appoint an audit committee and appoint seven independent directors to get Sebi approval for a follow-on public offer. Coal India, which is expected to hit the market with the biggest IPO this fiscal is also expected to face difficulties as it is short of four independent directors to meet Clause 49 requirement. The mining major will also have to take measures to form audit committees. According to the company?s chairman, the mining major will be tapping the market in September if the market conditions are favourable.