Database for independent directors

List to help companies choose their board members

The government and industry are finalising a national panel of independent directors, which will act as a database for companies looking for people to sit on their boards.

The database is being prepared by the National Foundation for Corporate Governance (NFCG), which has the ministry of company affairs, Confederation of Indian Industry (CII), Institute of Chartered Accountants of India (ICAI) and Institute of Company Secretaries of India (ICSI) as its trustees.

"NFCG is finalising a committee of three-five eminent people who will vet the list of persons to be included in the database," said an industry source.

NR Narayana Murthy, chief mentor of Infosys and vice-chairman of NFCG, would be on the committee, which was likely to be in place in three-four weeks, he added.

NFCG is headed by Company Affairs Minister Prem Chand Gupta and the secretary in the ministry is the other vice-chairman.

"CII had prepared a list of about 800-900 people about a year back and now it is in the process of refreshing that list for the database," the source said. NFCG is currently working out of CII offices.

"ICAI is finalising the guidelines and syllabus for a training programme of independent directors. It is likely to be in place next week," said Rajkumar Adukiya, council member and chairman of the corporate law committee at ICAI.

The first two-day training programme will be held in January and then taken to different cities, he added.

A committee of the council will meet in January to decide on how the database will be formed. Members already serving as independent directors on companies might not be required to go through the training, he pointed out.

The work at ICSI is at a preliminary stage. "We will put the directory of eminent professionals who could be approached for becoming independent directors on our website," said NK Jain, secretary, ICSI.

Stressing on the complex nature of the issue, Adukiya said, "Questions may be raised about the status of independent directors if a company chief is given the option to choose them." And if a regulator appointed an independent director, then that might be taken as interference, he added.

The concept paper on the new companies law currently being debated has further enlarged the universe of companies that need to have independent directors.

It has proposed that every public company having paid-up capital or turnover above a prescribed limit will have to ensure that one half the board comprises independent directors.

The existing guidelines apply only to listed companies as the concept of independent directors is dealt with in the listing agreement with the stock exchanges and not through the Companies Act.

NFCG was set up as a non-profit trust with a paid up capital of Rs 15 crore in October last year, but has only recently become active under the initiative of the ministry of company affairs.