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SEBI moots changes in Cl. 49

Special Correspondent

Nominee directors may be denied status of independent directors

MUMBAI: The Securities and Exchange Board of India (SEBI) on Friday proposed that nominee directors would not be considered as independent directors as part of Clause 49 of the listing agreement.

"Consequently, the provision which allows nominee directors appointed by institutions to be considered as independent directors may be deleted,'' SEBI suggested.

It is proposed that a provision be added stating that if the non-executive Chairman is a promoter or is related to promoters or persons occupying management positions at the Board level or at one level below the Board, he would not be treated as independent director and the company, in such a case, would be equired to have 50 per cent independent directors on the Board.

It is also proposed to stipulate that an independent director who resigns or is removed from the Board shall be replaced by a new independent director within a time-gap of not more than 90 days from such resignation or removal. "Without any time limit, a company may continue to remain non-compliant and may take a plea that it has not been able to find an independent director,'' SEBI stated. Further SEBI suggested that companies shall disclose the relation between independent directors inter-se as well as other directors of the company not holding a management position, in all documents where the details of the Board of directors are incorporated or given for information of the public or shareholders. It is proposed that the minimum age of an independent director shall be 21 years. SEBI also stated "it may not be possible to stipulate that experience, maximum age or qualification for an independent director since it would differ from company to company based on the line of activities it is engaged in.'' SEBI has sought responses to the suggestions on or before April 2.

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