The Hindu : `Cos. should do away with nominee directors'

Online edition of India's National Newspaper
Sunday, Mar 23, 2003

Business

Business

`Cos. should do away with nominee directors'

MUMBAI MARCH 22. The Securities and Exchange Board of India appointed Corporate Governance (CG) committee has recommended to do away with nominee directors appointed by the financial institutions on company boards.

The companies should lay down mandatory code of conduct for all board members and senior management of the company, the panel said.

"Where the institution wishes to appoint a director on the board, the shareholders should make such appointment. These directors will also not be considered as independent directors," the SEBI panel headed by Infosys Technologies Chairman and chief mentor, N. R. Narayana Murthy said, in the report released for public comments on Friday. The institution of nominee directors creates a conflict of interest that should be avoided, the panel felt. An institutional director, so appointed, should have the same responsibilities and liabilities as any other director.

The nominee of the government on public sector companies should be elected in the similar manner and subject to the same responsibilities and liabilities as other directors, the panel said. On the role of audit committee of listed companies, the panel said the committee should mandatorily review financial statements and draft audit report, including quarterly and half-yearly financial information. — PTI

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