Corporate norms now mandatory for CPSEs: Centre

The decision to this effect was taken by the Cabinet at its meeting chaired by the Prime Minister here. The Centre, in June 2007 introduced the guidelines on corporate governance for CPSEs, which were voluntary in nature for a period of one year on trial basis, and the same have been made mandatory now.

The guidelines cover issues like composition of boards of CPSEs, audit committees, subsidiary companies, disclosures, code of conduct and ethics, risk management and reporting.

The guidelines have been modified and improved keeping in view the experience gained during the experimental phase of one year and include additional provisions relating to monitoring the compliance of guidelines by CPSEs and formation of remuneration committee, an official statement said.

Since, the concept of corporate governance is dynamic, it has also been provided that suitable modifications in these guidelines would be carried out to bring them in line with prevailing laws, regulations and acts from time to time. Continued implementation of these will facilitate protection of interest of shareholders and other stakeholders and also ensure transparency in the operations of CPSEs, the statement observed.

Even as the principles of corporate governance apply equally to both the public and private sector, there is a continued need to adopt and apply the good corporate governance practices in respect of CPSEs where huge public funds are invested. 

Thus, after due inter-ministerial consultations, the proposal for introduction of guidelines on corporate governance for CPSEs on mandatory basis was approved, official sources said.