Of the 25 listed Central Public Sector Enterprise (CPSE) that does not have required number of independent directors seven belonged to oil and gas sector.
“The main reason for this delay in appointment of requisite number of independent directors on the Boards of these 25 CPSEs is the non-initiation of the proposals for appointment of independent directors by the concerned administrative ministries/departments in time,” the Minister of Heavy Industries & Public Enterprises, Praful Patel, informed Lok Sabha today.
The oil and gas companies were ONGC, GAIL (India), Oil India, Hindustan Petroleum Corporation, Bharat Petroleum Corporation, Chennai Petroleum Corporation of India, and Mangalore Refinery and Petrochemicals.
The Minister said that according to available information for the quarter ended September 30, 2012, 25 listed CPSEs have not complied with Clause 49 of Listing Agreement, which specifies composition of the Board.
He said that the administrative ministries/departments have already been advised to submit the proposals for appointment of independent directors at least six months in advance of the date of occurrence of the vacancies.
According to Clause 49 all listed entities including CPSEs are required to appoint requisite number of independent directors on their Boards. Where the Chairman of the Board is a non-executive director, at least one-third of the Board should comprise of Independent Directors and in case he is an executive director, at least half of the Board should comprise of Independent Directors.
Further, where the non-executive Chairman is a promoter of the company or is related to any promoter or person occupying management positions at the Board level or at one level below the Board, at least one-half of the Board of the company shall consist of independent directors, it stipulates.
Keywords: CPSEs, independent directors, ONGC, GAIL (India), Oil India, Hindustan Petroleum Corporation, Bharat Petroleum Corporation, Chennai Petroleum Corporation of India, and Mangalore Refinery and Petrochemicals, Clause 49 of Listing Agreement