Govt mulls seeking no 'wrongdoing' affidavit from independent director

To improve transparency and put in place stringent corporate governance norms for PSUs, government is working on a proposal that would require independent directors to submit an 'affidavit' stating they were not involved in any case of wrongdoings.

     
"There is a proposal that non-official directors have to provide an affidavit that they are not involved in any wrongdoings or fraud and comply with the laid down corporate governance norms," an official told PTI.

   
At present, independent directors joining a Central Public Sector Enterprise (CPSE) has to provide a simple declaration stating that he or she has not been involved in any fraud case.

The Department of Public Enterprises (DPE) is in the process of preparing a Cabinet note which will be soon circulated for inter-ministerial consultations."We are in the process of preparing a Cabinet note in this regard which would be soon circulated to the concerned ministries/department for taking their views," the official said.

Besides, an independent director has to ensure that he or she will not serve as an non-official director on the boards of more than three companies at any point in time, he said.

As per the Securities and Exchange Board of India (SEBI) guidelines, in case of companies with Non-Executive Chairman, at least one-third of the board should comprise independent directors, and in case of companies with Executive Chairman, at least half of the board should comprise non-official directors.