Governance norms for CPSEs made compulsory

The Cabinet today approved the continuation of guidelines on corporate governance for all the 246 Central Public Sector Enterprises (CPSEs) mandatorily. These norms were introduced in June 2007 and were voluntary in nature for a period of one year on a trial basis.

“The Guidelines have now been made mandatory and are applicable to all CPSEs. These cover issues like composition of board of CPSEs, audit committee, subsidiary companies, disclosures, code of conduct and ethics, risk management and reporting,” said a release distributed after the cabinet meeting.

The guidelines have also been improved in the wake of the experiences gained during the experimental phase of one year. The fresh norms include additional provisions relating to monitoring of the compliance of guidelines by CPSEs and formation of a remuneration committee.

According to the norms, the number of functional directors should not exceed 50 per cent of the board’s strength and at least a third should be independent directors.

Also, the audit committee of a CPSE should have at least three directors as members and an independent director should head the committee. Remuneration of directors should be disclosed in the company’s annual report.

The role of directors and auditors had come in for scrutiny after the multi-crore Satyam fraud in 2009.

Among other decisions, the Cabinet approved the establishment of the Indo-German Science and Technology Centre in India and a home ministry proposal for the modification and extension of police modernisation scheme for union territories.

OTHER DECISIONS

# Coastal zone mgmt: The Cabinet Committee on Economic Affairs approved a Rs 1,156-cr integrated coastal zone management project. The World Bank will contribute Rs 897 cr of the project

# SAIL FPO: In the absence of Steel Minister Virbhadra Singh, the Cabinet deferred its discussion on the Steel Authority of India Ltd’s follow-on share sale plan

Knowledge network
The Cabinet Committee on Infrastructure approved the establishment of the National Knowledge Network with an outlay of Rs 5,990 crore to be implemented by the National Informatics Centre over a period of 10 years.

The project aims at connecting 1,500 educational institutes across the country through high-speed data communication network.

Fertiliser-handling facility
CCI also approved installing mechanised fertiliser-handling facilities at the Visakhapatnam Port, with an estimated cost of Rs 217.58 crore. This would enable the port to handle 5.2 million tonnes of fertiliser a year.