In order to ensure parity between listed PSUs and their private sector peers, SEBI has asked the Government to fill all vacancies for women and Independent Directors at the Central Public Sector Enterprises (CPSEs).
All listed companies, whether PSUs or from the private sector, are required to have at least one woman Director on their Board. The original deadline for this rule to be enforced was 31st March, 2015. Along with many private sector companies, several PSUs failed to meet the deadline and they would be liable to pay penalties, which would be a minimum of Rs. 50,000 for those who ensured compliance by 30th June, 2015. The stock exchanges are expected to make public the names of the entities that have been penalised in this regard. The penalties would increase further for the companies which remain in default for a longer period.
The SEBI rules also require all listed companies to have at least one-third of the members of their respective Boards as Independent Directors. The new Companies Act also has provisions for at least one woman Director and a minimum of one-third Independent Directors.
The issue of non-compliance by the CPSEs on these matters was discussed by the SEBI Board during its last meeting. According to a Board memorandum, SEBI took up the matter with the Cabinet Secretary in June 2015. SEBI maintained the view that there should not be any exemptions for PSUs when it came to compliance of norms for listed companies.
Earlier, PSUs were given extra time to meet a requirement of a minimum of 25 per cent public shareholding, which was previously 10 per cent, but eventually, the rules were brought on par with those for their private sector peers. Following the Board Meeting in June 2015, SEBI’s Whole-Time Member, S Raman said that the new regime for every listed company to have at least one woman Director came into effect from 1st April, 2015, and that the companies which failed to comply would face penal action.
On another proposal for allowing more companies to tap the fast-track issuance of shares through follow-up offers or rights issues, SEBI said that its Primary Markets Advisory Committee had recommended exemptions from the applicability of conditions for such fast-track issuances for CPSEs. However, the regulator decided against such exemptions on the ground that the rules for the market should be uniform across all companies, whether in the private or the public sector.