Buzz Update The DPE moves to confirm the domain expert to get the post of Independent Director in CPSEs TOU

Buzz Update The DPE moves to confirm the domain expert to get the post of Independent Director in CPSEs


The DPE moves to confirm the domain expert to get the post of Independent Director in CPSEs

The Public Enterprises (DPE) under the Ministry of Finance has asked all Ministries / Departments to ‘observe’ the recommendation of the Public Sector Undertaking Committee (COPU) regarding the appointment of an independent Director, which may be seen as an impediment to the aspirations of the Civil Servant. On board the Central Public Sector Enterprises (CPSEs) based on domain expertise and proven track record.

The COPU is a parliamentary committee headed by BJP MP Santosh Kumar Gangwar. In its Action Taken Report on the observations / recommendations contained in its report on NTPC Ltd., the Government reiterated that the Committee should observe its observations in writing and in the spirit and direct the concerned Ministries / Departments. Independent directors on the board of CPSEs are made up of candidates with domain skills / core competencies and those with proven track record in relevant specific fields.

Now, in the Office Memorandum (OM), the DPE requests all Ministries and Departments to “observe the Committee’s recommendation for approval when forwarding the Panel of Names for the Appointment of Non-Official Directors on the Boards of CPSE to the OPE.” As on March 31, there are 255 operational CPSEs in India, 45 of which are listed on the Stock Exchange.

Terms of Companies Law

The Companies Act, 2013 stipulates that each listed public company must have at least one-third of the total number of directors as independent directors and that the Central Government may prescribe a minimum number of independent directors in respect of any class or class in public companies. According to the Companies (Appointment and Qualification of Directors) Rules, 2014, an independent director must have the appropriate skills, experience and knowledge in one or more areas, such as finance, law, management, sales, marketing, administration, research, corporate governance, and technical operations. Other divisions of the company business.

In a report submitted in February this year, COPU expressed concern over the lack of domain expertise and core competence for individuals appointed as independent directors on the NTPC board. At a meeting on June 26, 2006, the NTPC Board approved a resolution in which the nominated Independent Directors decided to have expertise in Economics, Human Resource Management, Regulatory Framework, Manufacturing Industry, Management Consultant, and the Environment. , Finance and banking, energy and power, academics or in research and development.

Lack of subject knowledge

The Committee noted that a large number of those employed on the Board do not have the domain skills required by civil servants when there is no shortage of experts available in the market. The DPE sought to justify that an IFS officer appointed as the Independent Director had worked in various positions with close understanding / understanding of forests / environmental issues and that he was considered an ‘environmental domain expert’. ‘.

The committee found that justifying an example of IFS officer recruitment has led to a larger issue of domain expert recruitment on the DPE board, which could bring more experience, professionalism, efficiency, expertise and transparency in performance. Of NTPC.


April 16, 2022

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