Uday Kotak committee to discuss PSE succession policy today

Issues such as succession policy, role and appointment of independent directors, accountability and autonomy of boards, besides other challenges faced by public sector enterprises are expected to be raised at the meeting of the SEBI-appointed and Uday Kotak-headed Committee on Corporate Governance on Monday.

Earlier this month, SEBI Chairman Ajay Tyagi had asked the Committee to look into the corporate governance challenges faced by listed public sector enterprises (PSEs) in depth.

UD Choubey, Director-General, SCOPE, who is also the member of the committee, told

BusinessLine, “The committee has been formed to suggest measures for improvement in corporate governance including appointment and role of independent directors. Public Sector Enterprises are facing many challenges related with governance. We are looking into all aspects.” Elaborating on the challenges faced by listed public sector enterprises in particular, a senior official said, “PSEs are governed by many regulatory systems, multiplicity of checks and balances, and there needs to be conformity among them. Succession plan is also a major concern in PSEs. The current selection procedure of appointment of Chairman and Managing Directors as well as Directors is cumbersome, as each proposal passes through several departments and multiple agencies.”

The role and appointment of independent directors has also been a contentious issue for the PSEs.

“The PSEs are criticised for not having requisite number of independent directors on their boards, as a result they are unable to comply with corporate governance norms such as constitution of audit committee, remuneration and nomination committee, etc.

“Hence, to overcome the challenges faced in succession plan as well as getting independent directors, a need is felt to create a transparent mechanism for the selection process. The Committee could discuss the issue,” the official added.

RTI applicability

Another critical issue which the Committee could consider is creating a level playing field between public sector and private sector for applicability of RTI.

“It should not be restricted to public sector. There seem to be instances where using the RTI, the private sector, has sought information on PSEs, but vice-versa is not applicable,” another official said.

In early June, SEBI had set up the committee under the Chairmanship of Uday Kotak, Executive Vice-Chairman and Managing Director of Kotak Mahindra Bank, to help improve the standards of corporate governance of listed companies in India.