Market regulator SEBI today gave an ultimatum to India inc for complying with stipulation of appointing independent directors on their board by December 31, saying there would be no relaxation or extension of the deadline for complying with Clause 49.
"SEBI, as a market regulator, expects total compliance of corporate governance norms. We have given enough time for those who have to meet the requirement of Clause 49," SEBI chairman M Damodaran said at the CII annual session here.
Clause 49 mandates that a company needs to appoint independent directors, whose number should be at least 50 per cent of the total board members.
Going a step forward, he said meeting Clause 49 norms was a "necessary condition" but not a sufficient one as there were other clauses in the corporate governance norms laid down under the listing agreement.
"Clause 49 is the minimum standard. You might comply with that and yet not with the corporate governance," he said. Maintaining that a company complying with corporate governance can generate higher shareholder value, SEBI chief said companies have to sustain the process of sticking to the best practices.
Damodaran did not buy the argument that induction of independent directors in the board of a company may hinder the decision making process, and said "if a board is constituted properly, 80 per cent of the job is done."
"Best managed companies don't have much problems in going along with their shareholders," he said.