Independent Directors in PSUs
Independent Directors in
PSUs
Section
149(4) of Companies Act, 2013 mandates appointment of independent directors by
listed companies. Further, as per Rule 4 of Companies (Appointment and
Qualifications of Directors) Rules, 2014 the following class of companies shall
have atleast two independent directors:-
• the Public Companies having paid up share capital of ten crore rupees or more; or
• the Public Companies having turnover of one hundred crore rupees or more; or
• the Public Companies which have, in aggregate, outstanding loans, debentures and deposits, exceeding fifty crore rupees;
Since, the issue of appointment of directors on the Board of Public Sector Undertakings falls in the domain of Department of Public Enterprises, this Ministry has sought their comments. Based on the comments received from the Department of Public Enterprises, the reply is as under:-
(i) The proposals for the appointment of independent (non-official) Directors are required to be initiated by the concerned Administrative Ministries and submitted to DPE. These proposals are processed in DPE and are placed for the consideration of the Search Committee. The recommendations of the Search Committee are thereafter forwarded to the concerned administrative Ministries. The appointment of non-official Directors on the Boards of CPSEs is made by the administrative Ministries on the basis of recommendations made by the Search Committee after completing due formalities and obtaining approval of competent authority.
(ii) The Non-official Directors are appointed for a tenure of three years. Filling up vacant positions of non-official Directors is a continuous process and these vacant positions will get filled up after proposals furnished by administrative Ministries are considered by the Search Committee and non-official Directors are appointed on the basis of the recommendations of the Search Committee.
(iii) Following actions have been taken to ensure the timely appointment of independent Directors on the Boards of CPSEs.
• Time lines have been prescribed for various activities associated with the process of selection and appointment of non-official Directors.
• DPE is regularly requesting the concerned administrative Ministries to furnish proposals for filling vacant positions.
• The Search Committee has recently recommended names for filling around 150 positions of independent Directors on the Boards of CPSEs (including listed CPSEs). Based on these recommendations, around 90 positions of independent Directors have already been filled.
This was stated by Shri Arun Jaitley, Minister of Corporate Affairs in written reply to a question in the Rajya Sabha.
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Judicious use of CSR
Resources
While no CSR
Compendium for the Corporates has been organised by the Ministry, the CSR
provisions under the Companies Act, 2013, exhort eligible corporates to
function in a socially responsible manner with the underlying spirit being to
ensure use of scarce resources in a judicious manner for the greater good of
Society.
Implementation of CSR by companies above specified threshold is a mandatory provision of the Companies Act, 2013. In order to facilitate effective implementation of CSR by companies, the Ministry of Corporate Affairs has (i) amended Schedule VII of the Act to ensure that a wide range of activities are permissible CSR activities ; (ii) issued a clarificatory circular dated 18.06.2014 suggesting, inter-alia, liberal interpretation of Schedule VII; and (iii) issued amendments to the Companies (Corporate Social Responsibility Policy) Rules, 2014, to (a) include ‘expenditure on administrative overheads’ for CSR as permissible CSR expenditure and (b) facilitate pooling of resources by companies to undertake CSR activities. All the above are available on the Ministry’s website (www.mca.gov.in).
This was stated by Shri Arun Jaitley, Minister of Corporate Affairs in written reply to a question in the Rajya Sabha.
Implementation of CSR by companies above specified threshold is a mandatory provision of the Companies Act, 2013. In order to facilitate effective implementation of CSR by companies, the Ministry of Corporate Affairs has (i) amended Schedule VII of the Act to ensure that a wide range of activities are permissible CSR activities ; (ii) issued a clarificatory circular dated 18.06.2014 suggesting, inter-alia, liberal interpretation of Schedule VII; and (iii) issued amendments to the Companies (Corporate Social Responsibility Policy) Rules, 2014, to (a) include ‘expenditure on administrative overheads’ for CSR as permissible CSR expenditure and (b) facilitate pooling of resources by companies to undertake CSR activities. All the above are available on the Ministry’s website (www.mca.gov.in).
This was stated by Shri Arun Jaitley, Minister of Corporate Affairs in written reply to a question in the Rajya Sabha.
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Compliance with CSR
Rules
The
provisions of Corporate Social Responsibility (CSR) under Section 135 of the
Companies Act, 2013 and rules made thereunder have come into force with effect
from 01.04.2014. The year 2014-15 was the first year of implementation of CSR
policies by companies under the legislation. As per Section 135(4) read with
Section 134(3) (o) of the Act, the Board of the company, eligible to comply
with the CSR provisions of the Act, is mandated to make annual disclosure on
CSR in the Board’s report. The companies are still in the process of filing
their Annual Reports with the Ministry. Details about number of companies that
have complied with the CSR provisions of the Act, CSR activities undertaken and
expenditure incurred there on, in the year 2014-15, are expected to be
available after requisite filings are made by companies.
This was stated by Shri Arun Jaitley, Minister of Corporate Affairs in written reply to a question in the Rajya Sabha.
This was stated by Shri Arun Jaitley, Minister of Corporate Affairs in written reply to a question in the Rajya Sabha.
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Review of Companies Act
The Companies Law Committee was
constituted (Annexure-I) in fulfillment of an assurance made by the Corporate
Affairs Minister during discussion on Companies (Amendment) Bill, 2014 in the
Rajya Sabha in response to the concerns raised by Members in Rajya Sabha as
well as for addressing issues raised by various stakeholders regarding the
Companies Act, 2013.
The CLC invited suggestions from all
stakeholders through the Ministry’s website www.mca.gov.in
and in response, approximately 2000 suggestions (including from Industry
Chambers, Professional Institutes, individuals etc.) were received by the
Committee. With a view to have broad-based deliberations on the suggestions
received, six groups were formed having representation from industry and
experts. The recommendations of CLC would be dealt with
appropriately.
The process for constitution of
National Company Law Tribunal (NCLT) has already been initiated with the
selection process for (Judicial as well as Technical) members of NCLT and
Technical Members of National Company Law Appellate Tribunal (NCLAT) having
commenced. Steps have also been taken to make provision for infrastructure and
other supportive requirements for the Tribunals.
This was stated by Shri Arun
Jaitley, Minister of Corporate Affairs in written reply to a question in the
Rajya Sabha.
*****
Annexure-I
F.
No. 2/19/2011-CL-V
Ministry
of Corporate Affairs
Government of India
Government of India
'A' Wing, 5th Floor, Shastri Bhawan
New Delhi - 110001.
Dated: 4th June, 2015
ORDER
Subject: - Constitution of Companies Law Committee
The Government hereby constitutes a Companies Law Committee consisting of the
following:-
|
S.
No. Name of Person/Institution
|
Position
|
|
|
1.
|
Secretary, Ministry of Corporate Affairs
|
Chairperson
|
|
2.
|
Ms. Reva Khetarpal, former Judge, Delhi
|
Member
|
|
|
High Court
|
|
|
3.
|
Sh.
Manoj Fadnis,
President, The
|
Member
|
|
|
Institute of Chartered Accountants of
|
|
|
|
India
|
|
|
4.
|
Sh.
Atul H Mehta,
President, The
|
Member
|
|
|
Institute
of Company
Secretaries of
|
|
|
|
India
|
|
|
5
|
Dr. A.S. Durga Prasad, President, The Institute of
Cost Accountants of India
|
Member
|
|
6.
|
Shri
Bharat Vasani, Chief
Legal &
|
Member
|
|
|
Group General Counsel, Tata Sons Ltd, Industry
nominee
|
|
|
7.
|
Shri Y.M. Deosthalee, Chairman, L&T
|
Member
|
|
|
Finance Holdings, Industry nominee
|
|
|
8.
|
Joint Secretary
(Policy), Ministry of
|
Member-Convener
|
|
|
Corporate Affairs
|
|
|
|
|
|
2
. The
Committee may invite or co-opt subject matter experts relating to corporate law
or any other subject matter, as well as experts from SEBI, RBI, C&AG as
needed. The Committee may also invite any other person or body in the interest
of broad-based consultation.
3. The
terms of reference of the Committee are as follows:
(i) to make
recommendations to the Government on issues arising from the implementation of
the Companies Act, 2013 and
(ii) to examine
the recommendations received from the Bankruptcy Law Reforms Committee, the
High Level Committee on CSR, the Law Commission and other agencies, while
undertaking (i) above.
4.
Non-official members of the Committee will be eligible for travelling,
conveyance and other allowances as per extant Government instructions, wherever
the sponsoring agency is unable to bear their expenditure. Secretarial support
to the Committee will be given by the Ministry of Corporate Affairs.
5. The Committee
shall submit its recommendations within six months of its first meeting.
Sd/-
(Alok Samantrai)
Director, Inspection and
Investigation
Phone: 2.338 9602
To
The
Members of the Committee
Copy
also to:
(i) PS to CAM
(ii) Sr. PPS to Secretary
(iii) PS to AS
(iv) PSs to JS(M), JS(B), JS(SP), JS(K)
(v) All RDs/ROCs/OLs
(vi) President ASSOCHAM/FICCI/CII
(vii) Guard File
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Redressal of Investors’
Grievances
As
per the investors’ grievances data maintained by the Ministry of Corporate
Affairs, action has been initiated against 319 Companies in 2012-13, 420
companies in 2013-14 and 2414 companies in 2014-15. This is an on-going
process.
Non-payment of dividend/interest on listed securities, pertaining to companies listed at stock exchanges is actionable under sections 11B/15C of the SEBI Act, 1992.
This was stated by Shri Arun Jaitley, Minister of Corporate Affairs in written reply to a question in the Rajya Sabha.
Non-payment of dividend/interest on listed securities, pertaining to companies listed at stock exchanges is actionable under sections 11B/15C of the SEBI Act, 1992.
This was stated by Shri Arun Jaitley, Minister of Corporate Affairs in written reply to a question in the Rajya Sabha.
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