Posts Tagged ‘corporate world’

Union Cabinet Approved the Implementation of Guidelines on Corporate Governance

The Union Cabinet approved the implementation of guidelines on corporate governance for Central Public Sector Enterprises (CPSEs) from voluntary to mandatory basis.

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The official statement said, “The guidelines have now been made mandatory and are applicable to all CPSEs. They cover issues like composition of Board of CPSEs, audit committee, subsidiary companies, disclosures, Code of conduct and ethics, risk management and reporting,”

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PSUs will now have to compulsorily follow corporate governance norms as per a cabinet decision.

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An official close to the matter said, “The guidelines have now been made mandatory and are applicable to all central public sector enterprises (CPSEs). The guidelines cover issues like composition of board of CPSEs, audit committee, subsidiary companies, disclosures, code of conduct and ethics,”.

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These guidelines follow from the first draft of June 2007 which were modified as per the feedback received during the experimental phase.

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It includes additional provisions relating to monitoring the compliance of guidelines by the CPSEs and formation of remuneration committee, reports IANS.

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The statement says, “There was a continued need to adopt and apply the good corporate governance practices in respect of CPSEs where huge public funds are invested in the light of recent events in the corporate world,”

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According to statements issued, “NKN is expected to encourage a larger section of research and educational institutions to create intellectual property. Health, education, grid computing, agriculture and e-Governance are the main applications identified for implementation and delivery on NKN,”

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In the initial phase, a core backbone consisting of 15 PoPs have been established with 2.5 Gbps capacity. Around 40 institutions of higher learning and advanced research have been connected to the network and six virtual classrooms set up.

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The statement added that the guidelines have been modified and improved with the experience gained during the experimental phase and includes additional provisions relating to monitoring the compliance of guidelines by the CPSEs and formation of a Remuneration Committee.

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Further, it said that suitable modifications in the guidelines would be carried out to bring them in line with prevailing laws, regulations and acts, adding that it will facilitate protection of interest of shareholders and other stakeholders, and also ensure transparency in the operations of CPSEs.

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Other details:

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” The number of functional directors should not exceed half of the board”s strength and at least a third should be independent directors.

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” The audit committee of these companies should have a minimum of three directors as members and an independent director should head the committee.

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Additional provisions relating to the compliance of guidelines by government-run firms and the formation of a remuneration committee.

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” Remuneration of directors should be disclosed in the company”s annual report.

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