Market regulator Sebi today said that presence of a common independent director on the boards of state-owned BHEL and IDBI Capital market Services (IDBI CMS) will not have any bearing on business relationship of the two companies.
The Securities and Exchange Board of India (Sebi) issued this clarification on a reference made by Bharat Heavy Electrical (BHEL) whether it could place orders with IDBI CMS as both the companies have a common independent director.
According to BHEL, the presence of former IAS officer Reva Nayyar on boards of both the companies prompted the engineering company to seek a clarification from the market regulator.
"Independent director by definition is a non-executive. Hence independent director of IDBI (CMS) cannot be construed to be an executive of IDBI (CMS)", Sebi said in its reply to BHEL.
As regards Clause 49 of the listing agreement, Sebi said, it does not "prohibit a listed company to place order on another company which has a common independent director on its board."
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