Market regulator SEBI may not be sympathetic to listed public sector companies if the latter’s boards were found to be non-compliant with board composition norms, its Chairman, U K Sinha, has said.

“If there is a violation, we will be taking action whether it is a private board or public sector board,” Sinha told BusinessLine after inaugurating KPMG’s first edition of Improving Board Effectiveness’ programme here on Friday.

He was responding to a query on whether non-compliant public sector companies will get kid glove treatment from SEBI post the recent “spring cleaning” of their boards by the Modi Government.

In the wake of the recent exodus of many independent directors from several listed public sector boards, many such companies are staring at the prospect of non-compliance with clause 49 of the listing agreement.

Clause 49 spells out the board composition norms for listed entities, including the minimum number of independent directors that companies should have in their boards.

As many as 71 independent directors have reportedly stepped aside from various PSU boards after the new Government was voted to power on May 16.

As of end-March 2014, as many as 900 companies listed in BSE Ltd were found to be non-compliant with Clause 49, Sinha said at the KPMG event.

SEBI intends to look up and take action against both the company and its wholetime directors, besides the promoters of these entities, he added.

IFRS CONVERGENCE

Sinha said companies would be given enough time to move into International Financial Reporting Standards (IFRS) converged standards.

“Discussions are on. Both the Finance Ministry and the Corporate Affairs Ministry are keen about IFRS. It (IFRS) won’t be done in disruptive manner,” he later told presspersons.

Finance Minister Arun Jaitley had in his maiden Budget speech announced that Indian companies will adopt IFRS converged standards from financial year 2016-17 and voluntarily from 2015-16.

>Srivats.kr@thehindu.co.in

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