Lok Sabha
The Government has not revised the norms for appointment of independent directors in companies. However, SEBI by Circular No.SEBI/CFD/DIL/CG/1/2004/12/10 dated 29.10.2004 has directed revision of clause 49 of the Listing Agreement of the Stock exchanges.
As per SEBI, the revised clause 49 is scheduled to come into effect from January 1, 2006 and would also apply to entities seeking listing for the first time as also to existing listing entities which were required to comply with pre-revised clause 49. SEBI has further indicated that persons who are independent directors on the Board of such companies are expected to ensure that such companies are run in a smooth manner consistent with the interest of all the stakeholders and not only the promoters.
The revised clause 49 provides that in the case of companies where the chairman is executive, at least half of the Directors on the Board of Directors should be independent. In case of companies where the chairman is non-executive, at least one third of the Board of Directors should be independent. The Listing Agreement applies only to entities listed on the stock exchange.
This information was given by Shri Prem Chand Gupta, Minister of Company Affairs in reply to a question raised by S/Shri Alok Kumar Mehta, N.S.V. Chitthan, Ravichandran Sippiparai, Madhu Goud Yaskhi and Mohd. Mukeem in Lok Sabha today.
BSC/AN
(Release ID :14566)