Financial Daily from THE HINDU group of publications
Tuesday, Jul 26, 2005
Markets - Regulatory Bodies & Rulings
`No extension of deadline for revised clause 49 compliance'
New Delhi , July 25
THE Securities and Exchange Board of India (SEBI) has ruled out any extension of the December 31 deadline set by it for compliance by listed companies with the revised clause 49 of the Listed Agreement.
"No concerns about December 31 deadline were expressed to me at today's meeting. Nobody has told me `no'. No Ministry has yet told us that December 31 is too close a deadline for appointment of independent directors. We will stick to the December 31 deadline," Mr M. Damodaran, Chairman of SEBI, told newspersons after an interactive meeting with CEOs of listed public sector enterprises (PSEs) today.
About 40 CEOs and senior executives of listed PSEs attended the meeting, including the IOC Chairman, Mr S. Behuria, and the SAIL Chairman, Mr V.S. Jain, the NTPC Chairman and Managing Director, Mr C.P. Jain, and the BEML Chairman and Managing Director, Mr V.R.S. Natarajan.
The meeting, organised by the Standing Conference of Public Enterprises (SCOPE), discussed the entire gamut of issues relating to revised clause 49 of the listing agreement.
The SEBI Chairman also made it clear that there was no conflict at all between what the capital market regulator was attempting to do and what the Ministry of Company Affairs was attempting to do based on the Irani committee recommendations.
"I would urge you to read the Irani committee's recommendations carefully. It says that in the opinion of the committee, in general a minimum of one-third of the total number of directors as independent directors should suffice. However, for separate categories, regulators may prescribe a higher limit."
Assuming that this translates into law without any change, it should be possible to reconcile the SEBI's position with that of the position of the Ministry of Company Affairs, he added.
At today's meeting, the PSE chiefs sought the SEBI's help in complying with the revised Clause 49.
Some of them pointed out that the Memorandum of Association/Articles of Association of certain PSEs stipulated that the Government would have to appoint the directors to the board.
They highlighted that the compliance of the PSE with revised clause 49 depended on the Government (administrative Ministry).
The SEBI Chairman complimented the PSEs for their outstanding commitment to corporate governance.
"It is not simply in terms of complying with the letter of clause 49 but even the spirit of clause 49. I go back from here not merely encouraged about the positive response but armed with practical suggestions they have made to enable me to make whatever improvements are necessary in pursuit of corporate governance."
Stating that PSE entities have by and large done exceptionally well in the area of governance, Mr Damodaran said that the SEBI recognised that there are problems that are faced only by the public sector and not by others.
He added that he had urged the PSE captains to be alongside SEBI in furthering the cause of governance and selling the concept of corporate governance.
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