Market regulator SEBI has gotten a suggestion for preventing the same individual from holding the position of chairman and managing director simultaneously in listed entities, but apex body of public enterprises SCOPE has opposed such a move, Parliament was informed on Tuesday.
"SEBI has received suggestions stating that the position of Chairman and that of Managing Director/Chief Executive Officer of the listed companies would be segregated," Minister of State for Finance Namo Narain Meena said in a written reply to the Rajya Sabha.
He said the Standing Conference of Public Enterprises (SCOPE) has come out against such a change in the structure of public sector units.
"SCOPE has argued that since the public sector companies in India have been structured through the checks and balance systems of the Comptroller and Auditor General of India, Central Vigilance Commission, Government Audit and Committee on Public Undertakings, there is no need to separate the role of Chairman and MD," Meena said.
The minister's reply in the Upper House of Parliament comes amid speculation that the Securities and Exchange Board of India has already 'proposed' to separate the role of chairman and MD/CEO of listed companies to prevent concentration of management powers with one individual.
A senior SCOPE official had earlier come out openly against any such 'proposal', which might lead to a major overhaul of the board structure in many of the listed firms. There are about 8,000 listed companies in the country, including 44 state-owned ones.
Meena, in his reply, added that according to SCOPE, any such decision to separate the two roles and alter the basic structure of organisations may affect the performance of PSUs.
Regarding the suggestion, he said that the Corporate Governance Voluntary Guidelines, 2009, brought out by the Ministry of Corporate Affairs had sought a clear demarcation of the roles and responsibilities of the Chairman and MD/CEO to promote a balance of power.
"Further requirement to segregate role of Chairman and CEO is also prevalent in developed jurisdictions, including the USA, UK and France," Meena added.
