The Narayana Murthy panel on corporate governance, appointed by the Securities and Exchange Board of India, has suggested that aggregate tenure of independent directors should be for a maximum of nine years.
It also suggested that institutional nominees, on the company board, should not be considered as independent directors even as Sebi has deferred implementation of listing agreements revised clause 49 until further notice.
The Sebi appointed panel in its new report on changes to the listing agreements has suggested that "a director should be considered to be an independent director only so long as his tenure on the board does not exceed, in the aggregate, a period of nine years".
This new provision should be prospective and applicable on or after the amended clause 49 comes into force, the panel said.
The market regulator is revisiting changes to clause 49 (made on August 26, 2003) and implementation of the same is being deferred till further notice," a Sebi press release said in Mumbai on Monday.
On the issue of definition of independent directors, the panel said, "There shall be no nominee directors and where an institution wishes to appoint a director on the board, such appointment should be made by the shareholders."
According to current listing norms, institutional directors on the boards of companies should be considered as independent directors whether the institution was an investing institution or a lending institution, the panel said.