The government is planning to regulate sitting fees of directors on the board of various companies as part of its corporate governance initiatives.
It is also considering a cap on the number of directors which a company can appoint on its board.
The maximum number of directors for public limited companies is proposed to be restricted to 15, while in case of private limited companies a dozen directors can be appointed. This would, however, require an amendment to the Companies Act, 1956.
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The issue of sitting fee was discussed at a recent meeting of the working group on corporate governance constituted by the department of company affairs (DCA) to recommend corporate governance norms. The department has been toying with the idea of putting in place regulations to regulate the sitting fees paid to various directors.
Following a series of corporate scandals in the United States, DCA secretary V K Dhall has also raised the issue at various public meetings as also during internal discussions.
Among other things, the working group is looking at the provisions of the Companies Act which should be amended to conform to the requirement of good corporate governance.
The group is expected to suggest amendments necessary to harmonise various provisions of the Companies Act with the listing agreements of stock exchanges, secretarial and accounting standards, SCRA and Sebi Act, Competition Law and the Takeover Code. The working group is headed by vice president of the Institute of Company Secretaries of India Pavan Kumar Vijay.
The government has stepped in to ensure that directors do not misuse their position on the board of the company for personal gains. The government has decided to put in place appointment norms for relatives of directors and senior executives of companies.