Govt on a hiring spree as 86% independent director posts lie vacant at central public sector enterprises

About 86% of the total independent director positions among central public sector enterprises (CPSEs) were vacant as of December 2024, having risen from about 59% two months earlier, prompting the government to try and accelerate the hiring process, people aware of the details said.

As many as 648 of about 750 independent or non-official director positions on the CPSE boards were vacant at the end of December, showed the latest official data. The vacancies stood at 392 at the end of September and 441 at the end of October, as tenures of many of them got over in recent months.

Urgent efforts are being made to fill the 200 such vacancies on the boards of 64 listed CPSEs, a senior official told ET.

CPSEs and their administrative ministries are engaged in talks with the departments of personnel and training (DoPT) and public enterprises, and the corporate affairs ministry to fill in the positions urgently so that corporate governance isn't hampered, ET has reported.

Options are being explored to fast-track the appointment process, and in some cases, extending the tenure of non-official directors are being considered to fill in the vacancies, he said.

As per norms, at least one-third of a listed company's directors must be the independent ones. An unlisted public company, beyond a stipulated size, needs to have at least two.

There are 389 CPSEs, including subsidiaries, in India, of which 70 are listed. The listed CPSEs account for more than 8% of the total market capitalisation of BSE firms.

Filling in the vacancies assumes significance as independent directors act as custodians of the most exacting standards of corporate governance and protectors of stakeholders' interests. The audit committees of companies, which oversee their statutory audit compliances, comprise mostly independent directors.

Such directors are usually appointed for a period of three years, with a provision for an extension of three years in the same CPSE. Beyond that, the directors can't serve on the board of the same CPSE.

Usually, the proposals for the appointment of non-official directors on the CPSE boards are initiated by the relevant administrative ministries or departments. They are supposed to recommend at least three eligible persons for each position and the selection is made by a search committee headed by the DoPT secretary.

The panel also includes the secretaries of public enterprises and the administrative departments concerned and non-official members.