Damodaran disfavours dilution of Clause 49

New Delhi, Jan 2 (UNI) SEBI Chairman M Damodaran today reaffirmed the stand of the market regulator on Clause 49 of listing agreement to have 50 per cent independent directors on the Board of a listed company, saying the solution did not lie in diluting the Clause but "elsewehere." These remarks from Mr Damodaran came at a Conference on 'Corporate Governance' here in response to a statement at the same event by ONGC CMD R S Sharma, who contended that diluting Clause 49 of the listing agreement will help provide a level playing field between PSUs and private companies.

Mr Damadoran, however, did not specify as to what he meant by "elsewhere," but his hint apparently was to the government.

Mr Sharma has maintained for sometime now that electing such a large number of independent directors to the Board of ONGC was difficult and would not provide a level playing field to the oil major with private players.

Clause 49 mandates that listed companies with an Executive Director will have half of its Board as Independent Directors. PSUs normally do not have Non-Executive Directors.

Mr Sharma speaking at the Conference earlier again raised the issue, contending that the 50 per cent requirement in the case of PSUs was not necesssary as they were accountable to Parliament and the government and can also be questioned by the Public under the Right to Information Act.

''We in India believe that Clause 49 is the last word on Corporate Governance. There are those who believe that the European or Japenese models are better. But you must look at this in reference to their jurisdiction- how corporate history and culture have evolved as this is the standard exercise. It has to relate with the history of corporates and the way they conducted their business,'' Mr Damodaran said.

Mr Dampdaran referred to two recent reports on Corporate Governance from the International Organisation of Securities Commission -- one relating to the matured economies and the other entailing the emerging markets.

He said that these reports reiterated the point that there was no one desirable framework of Corporate Governance. These practices have to be evolved taking the specifics into account- the country, the times and the corporate.

Mr Damodaran lauded the role of Comany Secretaries, saying it was a profession of conscience keepers and had the fortune to witness corporate history happening in the board rooms. By virtue of having an ringside view of the board room proceedings, they add immense value to corporates.

The day-long event was organised by the Institutes of Company Secretaries of India.

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