DCA secy's breather for boardroom

NEW DELHI: Here''s some good news for corporate honchos dreading a new regime in which independent directors rule the roost on the strength of their numerical majority on the board, mandated by the Companies (Amendment) Bill pending before Parliament.
Department of Company Affairs secretary Vinod Dhall clarified on Saturday that the board strength, of which independent directors have to number more than half, excludes the nominees of the financial institutions.
This would mean that if a company has a board size of 12, of which two are nominees of the financial institution, a minimum of 5 independent directors would have to be appointed once the Bill is enactment and notified.
Effectively, the number of independent directors would be less than half, if nominees of FIs are represented on the board.
The Amendment Bill had said that the at least 50% of the board should comprise independent directors and that the nominees of the financial institutions do not qualify as independent directors.
Speaking at a seminar on Companies (Amendment) Bill 2003 organised here by the Institute of Company Secretaries of India, Mr Dhall said the government was open to making appropriate changes to the Bill.
The department has organised a two-day consultation starting Monday with the experts to identify the problem areas in the Bill and draw up the changes required, sources said. Mr Dhall told the ICSI seminar that induction of independent directors should be seen as a good corporate governance practice. He added that the Bill provides for good corporate governance, greater credibility and integrity of auditors, greater investor protection, e-governance, liberalisation of law while increasing the deterrents for contravention.
The DCA secretary also said that the department has entrusted the Naresh Chandra committee to identify other measures.