Lok Sabha Question No. 424 (STARRED), answered on 2016-12-16
Subject: Appointment of Directors in Companies
Ministry: CORPORATE AFFAIRS
Asked by: ARVIND GANPAT SAWANT, MALLIKARJUN  KHARGE

## GOVERNMENT OF INDIA

## MINISTRY OF CORPORATE AFFAIRS

LOK SABHA STARRED QUESTION NO. 424 ANSWERED ON FRIDAY, THE 16th DECEMBER, 2016 AGRAHAYANA 25, 1938 (SAKA)

## APPOINTMENT OF DIRECTORS IN COMPANIES

## QUESTION

*424.  SHRI ARVIND SAWANT: SHRI MALLIKARJUN KHARGE:

Will the Minister of CORPORATE AFFAIRS कारपोरेट कार्य मंत्री be pleased to state:

- (a) the  criteria/norms  laid  down  for  the  appointment  of  independent directors in the companies including Public Sector Undertakings (PSUs); (b) whether  the  Government  is  aware  that  a  large  number  of  listed companies including PSUs have not appointed women Directors in its board and if so, the details thereof and the reasons therefor along with the corrective steps taken by the Government in this regard; and whether  the  Government  has  issued  any  directions  to  the  listed companies to nominate SCs/STs/OBCs as Director in their board and  if so, the

## ANSWER

THE MINISTER OF CORPORATE AFFAIRS                    (SHRI ARUN JAITLEY)

कारपोरेट कार्य मंत्री

(

(a) to (c):- A statement is laid on the Table of the House.

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श्री अरुण जेटली )

- (c) details thereof?

STATEMENT REFERRED TO IN ANSWER TO LOK SABHA STARRED QUESTION NO.  424  FOR  16.12.2016  REGARDING  APPOINTMENT  OF  DIRECTORS  IN

COMPANIES (a):Section  149  of  the  Companies  Act,  2013  read  with  Rule  4  and  5  of Companies (Appointment and Qualification of Directors) Rules, 2014 prescribes the  requirement  and  criteria  for  appointment  of  Independent  Directors  in companies. Regulation 17 of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 prescribes additional requirements for appointment of independent directors in listed companies. For Central Public Sector Enterprises (CPSEs), Department of Public Enterprises has laid down criteria in terms of age, educational qualifications and experience of persons to be considered for appointment as non-official (independent) Directors as per Annexure-I. (b):- 169 and 1106 number of companies listed on National Stock Exchange and Bombay Stock Exchange respectively, had not appointed woman directors as on  30th   September,  2016.  SEBI  had  laid  down  timeline  to  comply  with  the requirement of appointment of woman directors, failure to comply with which attracts a minimum fine of Rs.50,000/- and additional fine for every day of noncompliance. As per available information, a woman Director is not in position on  the  Boards  of  15  CPSEs.  The  list  of  the  CPSEs  is  at  Annexure-II.  The concerned Ministires have already been advised to take necessary corrective steps. (c):- No, Madam.

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## ANNEXURE-I

## ANNEXURE REFERRED TO IN ANSWER TO LOK SABHA STARRED QUESTION NO. 424 FOR 16.12.2016 REGARDING APPOINTMENT OF DIRECTORS IN COMPANIES

Criteria for selection/appointment of non-official Directors on the Boards of CPSEs as laid down by the Government

## (A) Criteria of Experience

- (i) Retired Government officials with a minimum of 10 years experience at Joint Secretary level or above.
- (ii) Persons  who  have  retired  as  CMD/CEOs  of  CPSEs  and  Functional Directors of the Schedule 'A' CPSEs. The ex-Chief Executives and exFunctional Directors of the CPSEs will not be considered for appointment  as  non-official  Director  on  the  Board  of  the  CPSE  from which they retire. Serving Chief Executives/Directors of CPSEs will not be eligible to be considered for appointment as non-official Directors on the Boards of any CPSEs.
- (iii) Academicians/Directors of Institutes/Heads of Department and Professors having more than 10 years teaching or research experience in the relevant domain e.g. management, finance, marketing, technology, human resources, or law.
- (iv) Professionals of repute having more than 15 years of relevant domain experience in fields relevant to the company's area of operation.
- (v) Former CEOs of private companies if the company is (a) listed on the Stock Exchanges or (b) unlisted but profit making and having an annual turnover of at least Rs.250 crore.
- (vi) Persons of eminence with proven track record from Industry, Business or Agriculture or Management.
- (vii) Serving CEOs and Directors of private companies listed on the Stock Exchanges may also be considered for appointment as part-time nonofficial Directors on the Boards of CPSEs in exceptional circumstances.
- (B) Criteria of Educational Qualification

Minimum graduate degree from a recognized university.

- (C) Criteria of Age

The age band should be between 45-65 years (minimum/maximum limit) This could, however, be relaxed for eminent professionals, for reasons to be recorded, being limited to 70 years.

- (D) Reappointment

The non-official  Directors,  will  not  be  re-appointed  in  the  same  CPSE  after completing a maximum of two tenures, each tenure being for a period of three years.

- (E) Appointment in number of CPSEs at the same time

One person will not be appointed as non-official Director on the Boards of more than three CPSEs at the same time.

(F) Directorship in private companies A person being considered for appointment as non-official Director on the Board of CPSEs should not hold directorship in more than 10 private companies. ********

Annexure-II ANNEXURE REFERRED TO IN ANSWER TO LOK SABHA STARRED QUESTION NO. 424

## FOR 16.12.2016 REGARDING APPOINTMENT OF DIRECTORS IN COMPANIES

List of listed CPSEs where no Woman Director is on Board

(As per information available with DPE on 13th December, 2016)

|   S.No | Name of CPSE                                  |
|--------|-----------------------------------------------|
|      1 | Fertilizers & Chemicals Travancore Ltd.       |
|      2 | Rashtriya Chemicals and Fertilizers Ltd.      |
|      3 | Neyveli Lignite Corporation Ltd.              |
|      4 | MMTC Ltd.                                     |
|      5 | State Trading Corporation of India Ltd.       |
|      6 | Hindustan Photo Films Manufacturing Co. Ltd.  |
|      7 | Scooters India Ltd.                           |
|      8 | Bharat Petroleum Corporation Ltd.             |
|      9 | Chennai Petroleum Corporation Ltd.            |
|     10 | GAIL (India) Ltd.                             |
|     11 | Indian Oil Corporation Ltd.                   |
|     12 | Oil & Natural Gas Corporation Ltd.            |
|     13 | Power Finance Corporation                     |
|     14 | Rural Electrification Corporation Ltd.        |
|     15 | Bharat Immunologicals & Biologicals Corp. Ltd |

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