The Hindu Business Line : SEBI to verify composition of company boards

ASSESSING THE BOARDS: Mr M. Damodaran (left), Chairman, SEBI, and Mr Jagdish Capoor, Chairman, BSE, at a press conference in Mumbai on Thursday. SEBI will look into the composition of board of directors of companies to assess the quality and independence of the independent directors, Mr Damodaran said. — Shashi Ashiwal

Mumbai , June 29

The Securities and Exchange Board of India (SEBI) will look into the composition of board of directors of companies to assess the quality and independence of the independent directors, SEBI Chairman, Mr M. Damodaran, said on Thursday.

Addressing a function organised by the Bombay Stock Exchange (BSE) here, he said the Clause-49 norms, which insisted on certain specified number of independent directors on board of companies from January 1, 2006, was a two-stage process. "In stage one it was the numbers (of independent directors). In stage two we will look into the content (on board) and not just numbers," Mr Damodaran said, after launching `Directors Database', an integrated database of directors of listed corporates brought out by Prime Database.

'independent director'

He said the regulator was also in the process of addressing some of the loopholes and inadequacies of Clause-49 shortly. This includes coming out with a definition of Independent Director.

Mr Damodaran also said that a formal education was not a necessary requirement for becoming an independent director. What matters were the new perspective that the independent director brings to the company, he said, pointing out that Microsoft's Mr Bill Gates and several other leading personalities rose up without going through a formal educational system.

Physical delivery of F&O

Later speaking to newspersons, he said SEBI would take up a proposal for physical delivery in futures and options (F&O) in its board meeting next month. The move, intended to bring down the volatility in the F&O segment, was first mooted four years ago.

The SEBI chief also hinted at hiking the turnover fees for brokers. When pointed out that the Anjaria Committee recommendations suggested downward revision of turnover fees, Mr Damodaran said the situation that existed when the Committee made the recommendations, has changed significantly now. He said SEBI does not get any budgetary support from the Government. Further, the regulator was also beefing up its staff strength in tune with the times.

Clause-49 details

Speaking on the occasion, Mr Prithvi Haldea, Managing Director of Prime Database, said its database would concentrate only on 2,352 of the 4,126 companies that are required to comply with the Clause-49.

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