As many as 441 of 750 independent or non-official director positions on the CPSE boards were vacant at the end of October, showed the latest official data. The vacancies surged from 392 at the end of September, as the tenures of many of the incumbents ended last month.
The focus is on filling the 200 vacancies on the boards of listed CPSEs, said the people.
CPSEs and their administrative ministries are engaged in talks with the departments of personnel and training (DoPT) and public enterprises and corporate affairs ministry to fill in the positions urgently so that corporate governance isn’t hampered, they added.
“The government is fully seized of the matter. Fresh appointments will be made soon; it’s an ongoing process,” said a senior official.
In many cases, the tenure of the non-official directors is proposed to be extended, he added.As per norms, at least one-third of a listed company’s directors must be independent ones. Similarly, an unlisted public company, beyond a stipulated size, needs at least two. There are 389 CPSEs, including subsidiaries, in India, of which 70 are listed. The listed CPSEs account for just over 10% of the total market capitalisation of BSE firms.Filling in the vacancies assumes significance, as independent directors act as custodians of the most exacting standards of corporate governance and protectors of stakeholders’ interests. The audit committees of companies, which oversee their statutory audit compliances, comprise mostly independent directors.
Such directors are usually appointed for a period of three years, with a provision for an extension of three years in the same CPSE. Beyond that, the directors can’t serve on the board of the same CPSE.
Usually, the proposals for the appointment of non-official directors on the CPSE boards are initiated by the relevant administrative ministries or departments. They are supposed to recommend at least three eligible persons for each position and the selection is made by a search committee headed by the DoPT secretary.
The panel also includes the secretaries of public enterprises and the administrative departments concerned and non-official members. The relevant administrative ministry or department then appoints the non-official directors based on the search committee’s recommendations.