The government is not in favour of allowing number of Independent Directors (IDs) in board of listed companies to exceed 33 per cent of their total strength against 50 per cent as is being mandated by Securities & Exchange Board of India (Sebi).
“Special provisions are being incorporated in the amended Company Law Bill to restrict the number of IDs in listed companies to 33 per cent of their total board’s strength to let corporate board function in autonomy,” Union Corporate Affairs Minister P C Gupta said while interacting with Assocham members here.
Stating that Sebi has sectorial role to play while Corporate Affairs Ministry had a wide spectrum and ultimately that would prevail what is being prescribed by the new Company Bill, which after its enactment will ensure that board of listed companies would have only 33 per cent IDs and not 50 per cent as is being sought by Sebi.
No muzzling tactics
Mr Gupta, however, indicated that as far as unlisted companies are concerned, Sebi’s recommendation for having 50 per cent IDs in the board could continue to prevail although a legal view on it is yet to be given final touches. He said that his ministry did not believe to muzzling the corporate sector and was of the view that it should function independently. ”Therefore there is hardly any need for number of IDs taking to 50 per cent of the board’s strength,” Mr Gupta said.