Govt expedites hiring to tackle 86% vacant director posts in central PSUs

As of December 2024, nearly 86 per cent of independent director positions in Central Public Sector Enterprises (CPSEs) remained vacant, a sharp rise from 59 per cent just two months prior. This situation has prompted the government to accelerate the recruitment process, according to a report in The Economic Times, citing sources.

 

Official data reveals that 648 of approximately 750 independent or non-official director roles on CPSE boards were unfilled by the end of December. This represents a significant increase from 392 vacancies in September and 441 in October, largely due to the expiry of many directors' terms in recent months.

 

Government’s push to filling vacancies

 

To address the pressing issue, urgent measures are being taken to fill approximately 200 vacancies across the boards of 64 listed CPSEs, a senior official told ET. Discussions are ongoing between CPSEs, their administrative ministries, the Department of Personnel and Training (DoPT), the Department of Public Enterprises, and the Ministry of Corporate Affairs to expedite the appointment process and safeguard corporate governance.

 

Options under consideration include fast-tracking the selection process and, in some cases, extending the tenure of existing non-official directors.  

 

Under current regulations, at least one-third of a listed company’s directors must be independent. For unlisted public companies of a certain size, a minimum of two independent directors is required.

 

India has a total of 389 CPSEs, including subsidiaries, of which 70 are listed. These listed enterprises contribute over 8 per cent to the total market capitalisation of companies listed on the Bombay Stock Exchange (BSE).

 

Need to fill vacancies 'critical'

 

The need to fill these vacancies is critical, as independent directors play a vital role in upholding corporate governance standards and safeguarding stakeholder interests. They also form a significant part of audit committees that oversee statutory compliance.

 

Independent directors typically serve three-year terms, with an option to extend for an additional three years within the same CPSE. However, they are not allowed to continue on the same board beyond six years.

 

Meanwhile, the appointment process for non-official directors involves the relevant administrative ministries or departments recommending at least three qualified candidates for each position. The final selection is made by a search committee headed by the DoPT secretary, alongside secretaries of public enterprises and administrative departments, as well as non-official members.