New Delhi, July 21, 2017
The government plans to amend the regulations pertaining to independent directors under the companies law, amid concerns over the procedures followed in appointment and removal of such directors.
In recent times, the role of independent directors has come to the fore in the context of corporate governance practices. “An amendment or otherwise to Section 169 would ensue after due process of consultation,” minister of state for corporate affairs Arjun Ram Meghwal said in a written reply to the Lok Sabha. Section 169 of the Companies Act, 2013 pertains to removal of independent directors. To a query on whether Sebi has sought the involvement of the government for revising the rules in the process of removal of independent directors by amending the Companies Act, the minister replied in the affirmative. Earlier this month, Sebi chairman Ajay Tyagi had said that some people are quite serious when they take up the role of an independent director, but there are plenty who are just eager to join the board as per convenience. “There is no procedure for selection of independent directors. Many of them, they are in closed clubs, the same people getting nominated or appointed to the same boards.
“… I was told some people said that the Companies Act, 2013 (rules) are so stringent that people can go to jail. My only question was that how many people have gone to jail,” the Sebi chief had said. In many cases, independent directors are appointed and removed at whims and fancies of promoters of companies, he had said.
[The Financial Express]