DPE to find more directors for PSUs
The department of public enterprises (DPE) will expand its list of candidates who can be appointed as independent directors on state-owned companies as it looks to redress a shortage of people to fill vacancies.
By Anto Antony, ET Bureau |
NEW DELHI: The department of public enterprises (DPE) will expand its list of candidates who can be appointed as independent directors on state-owned companies as it looks to redress a shortage of people to fill vacancies.
The expanded list that will be ready by March-end will have 516 names, 143 more than the current list. The DPE maintains a data bank of candidates to help the public sector undertakings (PSUs) and their administrative ministries identify independent directors.
We have received complaints from PSUs that the appointment process of independent directors is taking a long time due to non-availability of eligible candidates. We will enhance the data bank by March-end to make sure that the PSUs have enough options. We are also considering a better selection criteria for the independent directors,��� said a DPE
official, who asked not to be named.
The government is strictly enforcing the corporate governance norms as the role and quality of independent directors has come into sharp focus in the wake of the Satyam Computer Services scam where independent directors failed to prevent the fraud perpetuated by the promoter.
Last month, market regulator Sebi had written to the DPE asking it to fill the vacancies on PSU boards on a priority basis. According to the current guidelines, 50% of the board members of all listed central public sector enterprises need to be independent directors. In the case of unlisted PSUs, at least one-third of the board members should be independent directors.
Currently, administrative ministries recommend names of three candidates for every vacancy of independent director. A search committee comprising officials of DPE and public enterprise selection board (PESB) ��� a body that helps in appointments to PSUs ��� selects one of them for the post. The administrative ministries, thus, indirectly control these appointments.
Although we follow Sebi guidelines with regard to the appointment procedure, the enhancement of data bank will make sure that the candidates with relevant competence and experience from both private and public sectors can be hired,��� the official said.
The expanded list that will be ready by March-end will have 516 names, 143 more than the current list. The DPE maintains a data bank of candidates to help the public sector undertakings (PSUs) and their administrative ministries identify independent directors.
We have received complaints from PSUs that the appointment process of independent directors is taking a long time due to non-availability of eligible candidates. We will enhance the data bank by March-end to make sure that the PSUs have enough options. We are also considering a better selection criteria for the independent directors,��� said a DPE
official, who asked not to be named.
The government is strictly enforcing the corporate governance norms as the role and quality of independent directors has come into sharp focus in the wake of the Satyam Computer Services scam where independent directors failed to prevent the fraud perpetuated by the promoter.
Last month, market regulator Sebi had written to the DPE asking it to fill the vacancies on PSU boards on a priority basis. According to the current guidelines, 50% of the board members of all listed central public sector enterprises need to be independent directors. In the case of unlisted PSUs, at least one-third of the board members should be independent directors.
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Once the new data bank is in place, strict action will be taken against PSUs that fail to comply with the corporate governance norms regarding the independent directors,��� the official said.Currently, administrative ministries recommend names of three candidates for every vacancy of independent director. A search committee comprising officials of DPE and public enterprise selection board (PESB) ��� a body that helps in appointments to PSUs ��� selects one of them for the post. The administrative ministries, thus, indirectly control these appointments.
Although we follow Sebi guidelines with regard to the appointment procedure, the enhancement of data bank will make sure that the candidates with relevant competence and experience from both private and public sectors can be hired,��� the official said.
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