The government is on a hiring spree as the number of total vacant independent director positions among central public sector enterprises (CPSEs) has risen to 86% as of December from about 59% two months earlier, according to The Economics Times.
As per official data, 648 out of 750 independent or non-official director roles on CPSE boards were unfilled by the end of December. The number of vacancies stood at 392 in September and 441 in October. It is majorly because tenures of many of them got over in recent months, the report said.
The government is making urgent efforts to fill the 200 such vacancies on the boards of 64 listed CPSEs, the report said citing official sources.
To expedite the appointment process and safeguard corporate governance, the report stated that discussions are going on between CPSEs, their administrative ministries, the department of personnel and training (DoPT), the department of public enterprises, and the ministry of corporate affairs.
Various options including fast-tracking the selection process and, in some cases, extending the tenure of existing non-official directors are also under consideration.
According to regulations, at least one-third of a listed company's directors must be independent. For unlisted public companies of a certain size, a minimum of two independent directors is required.
In India, there are 389 CPSEs including subsidiaries and 70 of them are listed. These listed enterprises contribute over 8% to the total market capitalisation of companies listed on the Bombay Stock Exchange (BSE).
The Importance of Filling Vacancies
The urgency of filling the vacancies is important as these independent directors not only play a vital role in upholding corporate governance but also safeguarding stakeholder interests. They form a significant part of audit committees that oversee statutory compliance.
Generally, independent directors serve three-year terms. However, they get an option to extend for an additional three years within the same CPSE. However, they are prohibited from continuing on the same board beyond six years.
The process of appointing non-official directors involves administrative ministries or departments recommending a minimum of three qualified candidates for each vacancy. The final selection is carried out by a search committee chaired by the DoPT secretary, with participation from the secretaries of public enterprises and administrative departments, along with non-official members.
