Sail, ONGC and IOC ask for appointment of independent directors

ONGC, IOC press for independent directors to enjoy Maharatna status
The Economic Times…newspaper.

NEW DELHI: State-owned blue chip firms Sail, ONGC and IOC have asked their respective administrative ministries to fast-track appointment of independent directors on their boards so that they can enjoy their new Maharatna status. The government has conferred the prestigious navratna status — based on size and performance of a public sector undertaking (PSU) — to four companies. But only the NTPC board has been able to enjoy enhanced financial powers that comes with the status. Others do not have required number of independent directors on their boards to enjoy this status. Maharatna status gives more operational autonomy to PSUs allowing its board to clear projects up to Rs 5,000 crore without seeking government approval.

“We’ve communicated our concern to the ministry seeking immediate resolution. If we are not able to exercise the powers under the new category, there is no point in being called a Maharatna,” said an IOC official. Steel maker SAIL currently has only two independent directors. It ideally needs 12 independent directors as per clause 49 of Sebi’s listing agreement. “It is for the government to decide on appointment of new independent directors for SAIL,” the newly appointed SAIL chairman CS Verma said. Meanwhile, ONGC has also demanded that the number of independent directors on PSU boards be reduced to one-third as board becomes "too large to manage" if filled with 50% independent directors. As per Sebi guidelines, 50% of the company board should comprise independent directors. The market regulator also does not recognize government nominee directors on PSU board as independent directors. "For compliance to the Sebi guideline, the board becomes too large to manage. Too many opinions become cumbersome in the process of decision making in the board meetings," ONGC chairman R S Sharma said.
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