The Hindu Business Line : Corporate governance: Clarity on Clause 49 likely

THE Securities and Exchange Board of India (SEBI) Chairman, Mr M. Damodaran, on Friday met the Company Affairs Minister, Mr Prem Chand Gupta, raising hopes of an early solution to the contentious issues surrounding the revised Clause 49 of the Listing Agreement on corporate governance norms.

The SEBI had already declared that the revised Clause 49 of listing agreement would come into effect from April 1. The Ministry, however, had been raising concerns on certain aspects of the revised Clause 49, including the issue of extent of independent director representation on corporate boards.

Asked to comment on his first interaction with the MCA top brass, the SEBI Chairman told Business Line that the meeting was a "courtesy call." He also held that there were no detailed discussions on any regulations or rules.

On whether any board meeting of SEBI was in the offing, Mr Damodaran said that the SEBI board would meet on March 23 in Mumbai. This meeting would assume significance as the MCA has been making a case for keeping the implementation of the revised clause 49 in abeyance till the enactment of a new company law.

The previous board meeting of SEBI, which was held in Delhi in January, saw the Company Affairs Ministry raising the issue of extent of independent director representation in company boards under the revised Clause 49.

At that meeting, the MCA had highlighted that the existing Companies Act did not have a comprehensive definition of an independent director and that the Act did not stipulate that a corporate board should have 50 per cent representation from independent directors.

The revised Clause 49 stipulated that at least 50 per cent of a company's board should comprise independent directors. The Ministry had contended that the listing agreement though binding on companies had lesser legal sanctity than the Companies Act.

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