Blue-chips lead from front on board rejigs

New norms seeks to overhaul the way listed companies are governed in the country

A large number of blue-chip listed companies have embarked on major changes in their top governance bodies -- boards of directors -- to comply with new corporate governance norms being implemented by Sebi.

The new norms, which seeks to overhaul the way listed companies are governed in the country, have been cleared by regulator Sebi's board and would be soon incorporated by the stock exchanges in the Listing Agreement.

Among others, the new norms have put stringent conditions for appointment and tenure of independent directors, while they also require mandatory setting up of various committees.

According to top officials at various companies, many of which are present on benchmark indices Sensex and Nifty, they are working overtime to ensure compliance to new norms that would come into effect from October 1, 2014.

Many of these companies would see departure of some of their existing independent directors, as the number of their directorships exceed the new cap of seven, while some others are nominee directors and would no more qualify to be an 'independent director'.

Besides, companies would now need at least one woman director, while new norms also mandatory performance evaluation like measures for board members.

Executives at most of the non-compliant companies refused to officially comment on the ongoing restructuring exercises at their respective companies, saying any decision would be disclosed only after reaching a final decision.

Besides compliance to new norms, some other companies are also undertaking changes in their boards to bring in greater diversity and professionalism.

Some companies that have made changes to their respective boards in recent past include Religare Enterprises and PTC India, while entities like L&T, HDFC Bank and Axis Bank also have well-diversified boards.

Religare, a diversified financial services group, recently added names like Arun Ramanathan (former Finance Secretary) A C Mahajan (former Chairman and Managing Director at Canara Bank) and Sangeeta Talwar (former chief of NDDB and Mattel India) to is board.

Commenting on this, Religare Group CEO Shachindra Nath said, "The clear segregation between ownership and management shows the vision and courage of our promoters to think differently.

"It also shows the confidence that they have in the professional, operating management team and the governance framework that has been put in place to provide the promoters with returns on their deployed capital," he added.

Out of total 11 directors at Religare, five are independent, who continue to play an important role in terms of guidance and redefining transparency in operations," Nath said.