Psu Revamp Package To Seek Induction Of Outsiders On Boards

The revamp package for public sector underatkings (PSUs) drafted by the industry ministry calls for the appointment of professionals and outsiders to lend a measure of professionalism to the boards of these companies. The package is expected to be taken up for consideration by the Union cabinet soon.

Industry ministry sources said the ministry was willing to induct persons from various walks of life, including the private sector, on PSU boards. The only limiting factor in these appointments would be that there should be no conflict of interest, they specified.

The ministry is, however, not considering separating the roles of chairman and managing director of a company. Such a separation is part of the recommendations of the Cadbury Committee and now forms a part of the governments gameplan to introduce good governance to Indian private sector corporates.

 

Earlier, PSUs used to have a separate chairman and managing director, but this system gradually collapsed owing to differences between the two top office-holders in various PSUs.

The ministry, however, proposes to emphasise the need to support and strengthen corporate ethics and clean business practices, which it considers to be less prevalent in bottom-line driven private companies. It is the opinion within government that the positive points in PSUs should be strengthened, said sources.

The ministry also proposes to retain the right to decide on proposals seeking to dilute the governments majority shareholding in companies through either the joint venture or the Initial Public Offer route.

However, in order to provide PSUs with a certain amount of autonomy in decision-making, the ministry proposes to lay down public offer thresholds.

Thus, if the government decides to retain a 51 per cent holding in a public sector company, it will clearly lay down this threshold.