Sebi no to Clause 49 norms dilution for PSUs

The Securities and Exchange Board of India (Sebi) today ruled out relaxing norms on independent directors for public sector companies, saying corporate governance norms help boost confidence of investors in India Inc.

Contesting the views of ONGC chairman R S Sharma that the norms, as contained in Clause 49 of the listing agreement, come in the way of level-playing field between PSUs and private players, Sebi chairman M Damodaran said they are same for all companies.

Under Clause 49, it is binding upon all listed companies to fill 50% of their boards with independent directors in case they have an executive chairman and one-third in case they have a non-executive chairman.

"The solution suggested that corporate governance requirement should be less for PSUs is something I cannot persuade myself to agree with," Damodaran said at a conference organised by the Institute of Company Secretaries of India in the capital today.

Notwithstanding difficulties that PSUs face, solutions must be found somewhere else and not in diluting corporate governance norms.

Earlier, Sharma said PSUs are already over-regulated as they are accountable to the Parliament, CAG, CVC and now RTI.

He said Sebi should consider the Irani Committee report to reduce the number of independent directors to one-third of the total board strength for PSUs.