Indian panel favors increased role for independent directors

Tuesday, 24 December 2002, 08:00 Hrs
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NEW DELHI: A high-level Indian panel on corporate governance has favoured an increased role for independent directors in stock market-listed companies to check financial manipulations by the promoters.

The panel, headed by former cabinet secretary and Indian envoy to the U.S. Naresh Chandra, submitted its report to Finance Minister Jaswant Singh Monday.

According to the panel, at least half of the board of any listed company with paid-up capital and free reserves exceeding 100 million or turnover exceeding 500 million should comprise independent directors.

"For reckoning this majority, nominee directors of financial institutions are not to be counted either as independent nor as functional directors," it said.

"An independent director should not have any financial, business, personnel and employment relationship with the company, apart from receiving the director's remuneration," the report said.

The panel recommended that chief executive and chief financial officers of all listed companies and public limited companies with turnover exceeding 500 million should certify correctness of the annual audited accounts.

It also favoured the setting up of a corporate serious fraud office in the department of company affairs with specialists inducted on transfer and term contract basis.

The panel also suggested that auditors should disclose contingent liabilities clearly "because these may be significant risk factors that could affect the company's future health."

Source: IANS
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