The Hindu : Business : SEBI defers implementation of Clause 49

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Thursday, Mar 24, 2005

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SEBI defers implementation of Clause 49

MUMBAI, MARCH 23. Bowing to demand from corporates, the Securities and Exchange Board of India (SEBI) today deferred implementation of Clause 49 of the listing agreement till December 31 to provide listed entities, including public sector companies, time to appoint adequate number of independent directors and comply with the norms.

The board discussed Clause 49 of the listing pact which was expected to come into effect from April 1, 2005 to improve governance, the SEBI Chairman, M. Damodaran, told reporters after the board meeting here.

It was felt that the large number of listed entities would not be in a state of preparedness to comply with Clause 49 by March 31, 2005 and hence would be appropriate to defer implementation till 2005 end, he said.

"During the next nine months it is expected that listed entities would identify adequate number of independent directors and equip them to work effectively on the company boards,'' he said. The objective of the Clause 49 provisions is to improve quality of corporate governance at the board level, he added. Asked about any special concession for state-owned listed entities, the SEBI chief said this matter did not come up for discussion but they (PSUs) were not looked up on as special class and would have to comply with the provisions.

The government nominees are representatives of majority owner on the board of state-owned companies, he said.

On showcause notices to market participants for the May 17, 2004 crash, Mr. Damodaran said SEBI had issued 12 notices on charges of behaving in a manner inconsistent with what was expected of market intermediaries. He, however, declined to give the timeframe for completing probe and initiate action against those found guilty. — PTI

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