Sebi to do quality check of boards

Regulator scrutinising their composition.

MUMBAI: After getting India Inc’s board arithmetic right as per the revised Clause 49 norms, the Securities and Exchange Board of India (Sebi) now plans to focus on the “content” of the board of companies.

“We will now look at the content and composition of the board and not the numbers. The term ‘independent director’, as to independent of whom, will be defined,” said M Damodaran, Sebi chairman, at the launch of teh Bombay Stock Exchange’s Directors Database and Corporate Electronic Reporting System.

He said the idea is to ensure that the interest of the investors is protected.

As per the existing definition, an independent director has to be one who has no material or pecuniary relationship with any of the company’s promoters, directors, senior management, its subsidiaries and associates.

Clause 49 mandates that half of boards of companies with an executive chairman should comprise independent directors.

In the case of a non-executive chairman, at least one third of a company’s board should comprise independent directors.