A high-profile Sebi panel on corporate governance has suggested independence of public sector enterprises (PSEs) from the administrative ministry concerned to ensure speedy decision-making. In its report for overhaul of corporate governance norms for listed companies, the panel headed by eminent banker Uday Kotak said the government should establish a transparent mandate for PSEs and disclose their objectives and obligations. The objectives of the state-owned companies should be disclosed to shareholders on a regular basis so that investors can take informed investment decisions. “The government should aim at ensuring independence of the PSEs from the administrative ministry to ensure speedy decision-making, functional and operational autonomy in pursuit of their stated objectives, for better commercial goals and to attract talent in a competitive market place,” the report noted.
As a sustainable and optimal solution for minimising conflicts arising from the ownership and regulatory dichotomy in PSEs, the committee also recommended that the government should consider consolidating its “ownership and monitoring” of PSEs into independent holding entity structure by April 1, 2020.”An independent board with diversified skill set of the holding entity would also facilitate operationalising a consistent and high quality process on significant issues such as strategy, performance monitoring, mergers and acquisitions, and recruitment of best talent,” it added.
Capital markets regulator Sebi (Securities and Exchange Board of India) has sought public comments till November 4 on the panel’s recommendations, which run into 177 pages and covers a host of issues. The committee is of the view that these measures will significantly enhance value of the national assets and this should be done in a time-bound manner. The panel was set up by Sebi in June this year with a view to improving standards of corporate governance of listed entities in India. The committee, consisting of officials from the government, industry, professional bodies, stock exchanges, academicians, lawyers and proxy advisors, was asked to submit its report within four months.