COMPANY LAW
| Par panel for independent directors being part of 5 listed cos Wed, 01 Sep 2010 14:01:53 GMT |
| The Economic Times Par panel for independent directors being part of 5 listed cos NEW DELHI: A Parliamentary panel has suggested capping the number of listed companies' Boards an individual can be part of to five, and 10 in case of unlisted firms. The suggestion of the Standing Committee on Finance came as part of comments on the new Companies Bill that will replace the existing Act. The Ministry of Corporate Affairs had originally suggested allowing an individual to be an independent director in as many as seven listed companies and 15 public companies. Currently, there is no restriction on the number of companies a person can represent as an independent director. "The Committee would like to recommend that the maximum number of listed companies in which a person can be appointed as a director may be reduced to five...; while the maximum number of public companies...may be reduced to 10," the report said. The Standing Committee report on the Companies Bill 2009, which would come up for discussion in the winter session of Parliament, has focused on ways to make independent directors more accountable for irregularities. Independent directors are appointed to company boards to ensure fair play in company affairs, as they do not have vested interest in the company. However, the multi-crore accounting scam that came to light in Satyam Computer last year exposed their role as mere figureheads and raised questions about their functioning. The Committee said that the maximum directorship must range between 5 and 10 only, else it would be a "decorative post causing financial strain on the company." "Persons with relevant knowledge only must be appointed and celebrity having zero or little relevant business knowledge must be legally debarred from directorship," the report added. |
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