SEBI chief refers listed PSEs’ grievances to Kotak panel on governance

Corporate governance-related issues at listed public sector enterprises (PSEs) will be “examined” by the SEBI-appointed Uday Kotak-led committee, SEBI Chairman Ajay Tyagi said on Monday.

“We fully realise that public sector enterprises have certain issues different from the private sector. The issues raised by (PSEs) will be examined by the Kotak-led committee,” Tyagi said at an interactive meeting with chief executives of PSEs, organised by SCOPE.

The terms of reference of the Uday Kotak Panel, set up in early June, did not include specific aspects of corporate governance issues of PSEs. The panel on corporate governance, which has so far met twice, is expected to submit its report in three months.

Its report will form the basis for SEBI to take a “serious re-look” at what needs to be done to improve corporate governance among listed entities, Tyagi said.

The listed PSEs are subjected to oversight by the CAG and CVC, but listed private entities are not. There is a need for a level playing field, said UD Choubey, Director General, SCOPE.

Listed PSEs also want SEBI to exempt them from the succession planning norms stipulated in the listing regulations as they are “impracticable” to implement. They also claim they are disadvantaged vis-a-vis listed private companies when it comes to related party restrictions. The related party transactions (RPT) norms under the listing regulations may not bring substantial results for public sector as much as for the private sector.

“Insistence on RPT norms will only increase paper work or administrative work without commensurate benefits,” a senior PSE official said. SEBI’s listing regulations stipulate that all related party transactions require prior approval of the audit committee.

Listed PSEs also submitted that they are bogged down by director evaluation norms, which they feel is difficult to implement and perhaps not possible in PSEs.

Listed PSEs also sought exemption from the norm that requires a new independent director to be appointed within three months of the resignation of the existing director or at the next meeting, whichever is earlier.

“This is practically not possible as all the independent directors are appointed by the government. The board has no say on appointment of directors in PSEs,” the official said. There is an institutionalised procedure for composition of the PSE Board and the selection of directors.

Tyagi also expressed disappointment over the listed PSEs’ poor track record in appointment of women directors on their boards. A fifth of the PSEs don’t have women directors, he noted.

On both the aspects of independent directors and audit committee, there is need for much improvement in the case of PSEs, Tyagi said. Ninety per cent of PSEs don’t have full independent directors, and this is a “huge number”, he said.

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