The Hindu : Business : Put off Cl.49 deadline, say CEOs

Online edition of India's National Newspaper
Wednesday, Jun 15, 2005

Business

Business

Put off Cl.49 deadline, say CEOs

Special Correspondent

Recommendations of Irani Committee welcomed

NEW DELHI: Seventy per cent of top CEOs and managing directors (MDs) want the Securities Exchange Board of India to extend the Clause 49 deadline by another six months, even as the market regulator has repeatedly said there would not be any further extension after December for induction of independent directors (IDs).

According to the Associated Chambers of Commerce and Industry of India (Assocham) survey, the executives said the time was too short for finding competent independent directors. They noted that the Irani Committee had suggested only one-third as independent whereas the SEBI's listing agreement, the number of IDs should be 50 per cent of the board strength if the chairman is an executive director and IDs should hold one-third of the board's strength if the chairman is a non-executive director.

However, most of them were in agreement with the Irani Committee recommendations.

Most respondents also feel that they may have to incur additional expenses up to 40 per cent to comply with the SEBI guidelines.

The Assocham President, M. K. Sanghi, observed that in view of the difficulties faced by the companies in finding independent directors, the SEBI should consider extending the Clause 49 deadline.

While 50 per cent of those surveyed felt that extension in the deadline should be for a year, the respondents were divided over the question of accountability and responsibility. Fifty per cent of the respondents said that they did not favour their being blamed for acts of omission and commission even as 46 per cent were of the view that they should be held responsible.

However, most of them felt that the IDs should be held responsible if such omissions and commissions had taken place within their knowledge or negligence.

The respondents felt that there would be huge amount of paper work and additional load for the companies, especially the sick companies.

Printer friendly page
Send this article to Friends by E-Mail

Business

News Update

Stories in this Section