Government s likely to introduce a fixed time-frame for nomination of independent directors in state-run companies
Feb 3, 2010 Company Law
With the aggressive disinvestment of PSUs being planned for the coming months, the government is likely to introduce a fixed time-frame during which the nomination of independent directors should be completed by state-run companies.
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Tags: CLAUSE 49, independent directors, Listing Agreement, SEBI
Do Independent directors really independent?
May 21, 2009 Company Law
More than seven of 10 independent directors sitting on the boards of listed companies to improve corporate governance are “home” members, while only few women make it to such positions, says a study.”Nearly 75 per cent of all independent directors are ‘home’ members whoare natural allies of the promoters are not independent in any sense,” said a study by research firm Prime Database, which operates website directorsdatabase.com, a joint initiative with the Bombay Stock Exchange (BSE).Even if the “home” members, which include relatives, friends and neighbours, are qualified they cannot act independently because of their connection with the promoters, said the study based on the profiles of independent directors on the boards of 2,244 companies listed on the BSE.The study further points out that very few women are independent directors, about 2.5 per cent of the 6,443 such functionaries engaged by listed companies.
“Women in India have made rapid strides in almost all walks of life, and have not only excelled but also demonstrated a higher degree of governance. But not when it comes to directorship position. Only 2.5 per cent of independent directors are women,” it said.As per Clause 49 of the listing agreement, 50 per cent of the directors on boards of listed firms should be independent directors. The norm was introduced by the capital market regulator SEBI to promote corporate governance.
The Prime Database study further points out that companies often engage celebrities as independent directors “to add an aura of respectability and news value to the company, as also to impress both the institutional as well as the retail investors”.
About five per cent of the independent directors fall in the category of celebrities which include film stars, lyricists, sportsmen, defence personnel and fiction writers.Noting that like in 1980s when the companies hired celebrities like Sunil Gavaskar and Field Marshall Manekshaw “as selling tools for their IPOs (initial public offerings)”, the study said, “We have…now legitimised these celebrity directors by giving them the respectable title of independent directors.”
Though most people in the celebrity category would be people of high integrity, “they would have very little clue to the world of corporates or of promoters’ design. They are just happy lending their names”.
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Tags: bombay stock exchange, CLAUSE 49, corporate governance, corporates, friends and neighbours, initial public offerings, market regulator, Promoters, relatives, SEBI, sunil gavaskar
SEBI HAS MADE AMENDMENTS TO CLAUSE 49 OF THE LISTING AGREEMENT THAT DEALS WITH CORPORATE GOVERNANCE NORMS.
Oct 31, 2008 SEBI
The amendments have been made after representations from entities requested Sebi to bring about further clarity on the amendment (made on April 
where the promoter of a listed company is a listed or an unlisted entity. A Sebi release said, “If the promoter is a listed entity, its directors —other than the independent directors, its employees, or its nominees — shall be deemed to be related to it.” But, “if the promoter is an unlisted entity, its directors, employees or nominees shall be deemed to be related to it.”
where the promoter of a listed company is a listed or an unlisted entity. A Sebi release said, “If the promoter is a listed entity, its directors —other than the independent directors, its employees, or its nominees — shall be deemed to be related to it.” But, “if the promoter is an unlisted entity, its directors, employees or nominees shall be deemed to be related to it.”Tags: amendments, CLAUSE 49, clauses, corporate governance norms, independent directors, listed company