The Centre on Thursday made it mandatory for all central public sector enterprises (CPSEs) to follow corporate governance norms and business ethics to protect interests of shareholders and other stakeholders and ensure transparency in operations.

The Union Cabinet approved the continuation of guidelines on corporate governance for all CPSEs on mandatory basis. “The guidelines have now been made mandatory and are applicable to all CPSEs. The guidelines cover issues like composition of boards of CPSEs, audit committee, subsidiary companies, disclosures, code of conduct and ethics, risk management and reporting,” a government statement said.

The guidelines have been modified and improved keeping in view the experience gained during the experimental phase of one year and includes additional provisions relating to monitoring the compliance of guidelines by the CPSEs and formation of Remuneration Committee.

As per the norms, the number of functional directors should not exceed 50 per cent of the board's strength and at least one-third should be independent directors. Similarly, the audit committee of a CPSE should have a minimum of three directors as members and an independent director should head the committee, while remuneration of directors should be disclosed in the company's annual report.

Significantly, over Rs. 5.28-lakh crore has been invested in 246 CPSEs currently operational.

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