The Comptroller and Auditor General (C&AG) has highlighted that some Central Public Sector Enterprises are not following provisions related to corporate governance, with half of the listed ones not having women directors on the board.

As of March 31, 2021, 717 CPSEs were under the audit jurisdiction of C&AG. These included 508 government companies, 203 government-controlled other companies, and six statutory corporations. A report tabled in the Lok Sabha dealt with 453 government companies and corporations (including six statutory corporations) and 180 government-controlled other companies. Out of these 72 CPSEs are listed.

Provisions under Companies Act 2013 mandates appointment of one woman as director on the board of listed companies. Later, regulations by SEBI (the Securities and Exchange Board of India) prescribed that the board of directors of the top 1,000 listed entities shall have at least one independent woman director by April 1, 2020. Then regulations by SEBI and guidelines by Department of Public Enterprises (DPE) say where the Chairman of the Board is a Non-Executive Director, at least one-third of the Board should comprise Independent directors, and, in case he is an Executive Director, at least half of the Board should comprise of independent Directors.

No women directors

Based on information available until March 31, 2021. C&AG found that out of 72 listed CPSEs, 37 (51 per cent) have independent directors but no women directors on their board. Some of the listed companies without a woman director include NMDC Limited, Hindustan Aeronautics Limited, IRCTC, NTPC, Power Finance, Hindustan Copper, NALCO, and Shipping Corporation, among others. However, according to SEBI guidelines, only 8 of the CPSEs included in the top 1,000 listed entities do not have independent women directors, and among them SAIL and ONGC are prominent.

C&AG said that non-executive directors were less than 50 per cent of the board strength in 32 CPSEs (44 per cent) and that the required number of independent directors had not been appointed in 59 CPSEs (82 per cent). The board is the most significant instrument of corporate governance. SEBI regulations stipulate that the Board of Directors of the company shall have an optimum combination of executive and non-executive directors, with not less than 50 per cent of the Board of Directors comprising non-executive directors. C&AG found that companies such as NMDC, HAL, Coal India, GAIL, Indian Oil, NTPC, beside others, do not have the required number of non-executive directors. Similarly, companies such as NMDC, HAL, Oil India, GAIL, NHPC, NTPC, Shipping Corporation, and ONGC, beside others, do not have the required number of independent directors.

Another important provision related with corporate governance, as prescribed by SEBI, stipulates that the Board of Directors of the top 2,000 listed entities shall comprise not less than six directors. However, the criteria of minimum of six directors was not met in 15 out of the 70 (21 per cent) listed CPSEs (part of the top 2000 listed entities). Out of 70 CPSEs (part of the top 2000 listed entities), 17 CPSEs (24 per cent) have an insufficient quorum of directors at the board meeting, including at least one independent director.

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