A large number of blue-chip listed companies have embarked on major changes in their top governance bodies, boards of directors to comply with new corporate governance norms being implemented by Sebi.
The new norms, which seeks to overhaul the way listed companies are governed in the country, have been cleared by Securities and Exchange Board of India’s board and would be soon incorporated by the stock exchanges in the Listing Agreement.
Among others, the new norms have put stringent conditions for appointment and tenure of independent directors, while they also require mandatory setting up of various committees.
According to top officials at various companies, many of which are present on benchmark indices Sensex and Nifty, they are working overtime to ensure compliance to new norms that would come into effect from October 1, 2014.
Many of these companies would see departure of some of their existing independent directors, as the number of their directorships exceed the new cap of seven, while some others are nominee directors and would no more qualify to be an ‘independent director’ on a company board.
Besides, companies would now need at least one woman director, while new norms also mandatory performance evaluation like measures for board members.
Executives at most of the non compliant companies refused to officially comment on the ongoing restructuring exercises at their respective companies, saying any decision would be disclosed only after reaching a final decision.
Besides compliance to new norms, some other companies are also undertaking changes in their boards to bring in greater diversity and professionalism. Some companies that have made changes to their respective boards in recent past include Religare Enterprises and PTC Indiaz, while entities like L&T, HDFC Bank and Axis Bank also have well diversified boards.
