Bigger DPE list to help select independent directors

NEW DELHI: The department of public enterprises (DPE) will now expand its data bank of eligible candidates in a bid to facilitate the appointment of independent directors on the boards of public sector units. Companies now need to have a larger number of independent directors on the board to meet the stipulations under Clause 49 of the listing agreement which companies sign with the stock exchange.

As of now, DPE maintains a data bank of candidates who fulfil the eligibility criteria and can be hired by PSUs in case there is difficulty in identifying eligible persons by the PSU and its administrative ministry. Currently, names like Tata Services MD T R Doongaji, HSBC ex-CEO Aman Mehta and Geojit Financial Services MD C J George figure along with ex-CMDs of various PSUs in the bank maintained by the nodal agency for public sector units.

Earlier, various PSUs have received showcause notices from Sebi for penalty and adjudication proceedings for non-compliance with the Clause 49 of the listing agreement. According to the agreement, companies need to have 50% independent directors on their boards.

���We���ve received complaints from PSUs that the appointment process took long on account of non-availability of candidates, and involvement of various government agencies in the process. We���ll continue to enhance the data bank to make sure the PSUs have enough options available,��� a DPE official said. The nodal agency has also invited candidates to post their resum��s with the department.

Currently, administrative ministries recommend names of three candidates for the post of an independent director in a PSU. A search committee comprising officials of DPE and PESB selects one of them for the post. The administrative ministries thus indirectly control appointment of independent directors in their PSUs. The nodal agency is also considering a proposal to empower the search committee to select and appoint a candidate and curtail the role of the administrative ministry.

���Though we follow the Sebi guidelines with regard to the appointment procedure, the enhancement of data bank will make sure the candidates with relevant competence and experience from both private and public sectors can be hired,��� the official said.