The new Company Law could mandate that the strength of independent directors on boards of companies should be 33 per cent, pitting the government against the Securities and Exchange Board of India, which stipulates that 50 per cent of directors on boards of listed companies should be independent.
"I think the figure of one-third is sufficient," Minister of Corporate Affairs Prem Chand Gupta told newspersons here on the sidelines of a seminar on accounting standards organised by Assocham. The J J Irani Committee, formed to suggest the framework of the new law, has recommended that the independent directors should form one-third of the boards.
The minister said that Sebi was a sectoral regulator for listed companies while the law would deal with all
companies and would have wide scope of work.
Asked whether a situation could emerge where listed companies comply with SEBI guidelines while unlisted companies could fill 33 per cent of their board positions with independent directors, Gupta refused to comment.
He said the new Company Law was being formulated in consultation with corporates and if they had said that the limit of independent directors on boards should be 25 per cent of the total strength it would have been accepted.
Gupta said the Bill for the new law would be introduced in the winter session and was being formulated by the law ministry. "I would have liked to place the Bill in Parliament earlier but as it will replace an old complicated Act, the consultation process is taking time," he said.