Sebi to amend Clause 49 to tighten listing norms

The Securities and Exchange Board of India (Sebi) proposes to initiate a series of changes in Clause 49 rules, to tighten the listing norms for companies.

Under the changes proposed, the government nominees in public sector companies would not be treated as independent directors as they have "material pecuniary relationship with the government".

The market regulator also made it mandatory for companies to disclose relationship between independent directors, as well as other directors.

Companies would "disclose the relation between independent directors inter-se, as well as the other directors of the company not holding management position, in all documents where the details of the board of directors are incorporated," Sebi said.

The proposed norms were made public for feedback today.

Sebi also proposed deletion of the provision allowing nominee directors appointed by the institutions to be considered as independent directors.

The proposals came after Sebi received complaints that some companies were appointing independent directors related to other directors on the board. "These practices do not uphold the spirit of the clause (49) and such persons should not be considered independent," Sebi said.

However, on disclosure of relationship between independent directors on a company's board, the market regulator said: "It may not be possible to mandate a blanket provision that independent directors should not be related to each other."

Sebi also proposed to fix the minimum age of 21 for independent directors. However, the regulator said it was not possible to stipulate an independent director's experience since it would differ from company to company.