Govt proposing norms for independent directors at CPSEs

To improve corporate governance in state-owned companies, the Department of Public Enterprises (DPE) is proposing norms for independent directors that will define their roles and responsibilities.

At present, there are no such guidelines for non-official directors who are being appointed on boards of Central Public Sector Enterprises (CPSEs).

"The department will soon invite comments on the draft report, prepared by the Institute of Chartered Accountants of India, from various administrative ministries/departments and CPSEs operating in sectors like petroleum, power and steel," an official said.

Once the comments are received, the department will finalise the report, he added.

The draft report stresses that non-official directors (NoDs) should have a candid view of the faults or shortcomings of companies' plans and accordingly suggest measures for improvement.

Also, they should not use confidential information acquired as NoDs for their personal advantage or for any other entity.

Besides, it states that NoDs should focus on bringing an objective view in the evaluation of the performance of board and management; and determine appropriate levels of remuneration as per the corporate governance guidelines for CPSEs, the official said.

"The fulfilment of the responsibilities in an efficient manner by an independent director would lead to good corporate governance in a PSU which will further help in protecting stakeholders' confidence," he said.

Independent directors are experts from various fields like technocrats, management experts and consultants, and professional managers in industry and trade with a high degree of proven ability.

As per the SEBI guidelines, in case of companies with Non-Executive Chairman, at least one-third of the board should comprise independent directors and in case of companies with Executive Chairman at least half of the board should comprise non-official directors. 
PTI