The Hindu Business Line : PowerGrid, NHPC public offers face Clause 49 blues

New Delhi May 24 Power Grid Corporation of India Ltd (PGCIL) and National Hydroelectric Power Corporation (NHPC) public floats are in for delays, with both companies yet to appoint the requisite number of independent directors on their boards as stipulated under Clause 49 of the Listing Agreement.

Both the state-owned companies are yet to appoint a single independent director on their boards, with PGCIL needing six independent directors and NHPC requiring seven directors before they can go public. "We have approached the Government on the issue... The Government is in the process of clearing the appointment of independent directors on the board," a PGCIL official said.

The company was earlier planning to come out with its IPO in April, which has been pushed back on account of delays in clearances from the Securities and Exchange Board of India.

Clause 49

Under Clause 49, in companies where the chairman of the board is a non-executive director, at least one-third of the board should consist of independent directors while in cases where the chairman is an executive director, at least half of the board should consist of independent directors.

Both PGCIL and NHPC have a Chairman and Managing Director each at the helm, with PGCIL having two other functional directors and two Power Ministry representatives on its board and NHPC having three functional directors, one representative from the Power Ministry and a Central Electricity Authority Member on its board.

NHPC has revised its IPO dates to early July, provided the company gets Government approval to appoint independent directors before that. NHPC plans fresh shares amounting to around 10 per cent of its authorised share capital of Rs 15,000 crore. The Government, which currently holds 100 per cent equity in the company, will sell 5 per cent of its shares to the public.

PGCIL plans to sell 10 per cent of its equity capital through the IPO, the proceeds from which would be used to part-finance the funding requirement for the ongoing Rs 80,000 crore National Grid project.

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