It is an extension of jurisdiction over unlisted companies indirectly, the ministry said in a letter to the market regulator. The govt has also opposed the panel’s proposal to increase the minimum no of directors on listed firms to six from three.
Mumbai : The Ministry of Corporate Affairs has questioned some of the recommendations by the Securities and Exchange Board of India’s panel on corporate governance, saying some of the suggestions go beyond its jurisdiction. Among its recommendations, the SEBI panel has proposed enhancing monitoring of subsidiaries, associates and joint ventures of listed companies, including obligatory audits, and setting up group governance units among others.
In its comments, the ministry said that these recommendations “would amount to encroachment into the unlisted space”, which is governed by the corporate affairs ministry. “It is an extension of jurisdiction over unlisted companies indirectly,” the ministry said in a letter to the market regulator. On the panel’s suggestions regarding reporting of financial results, it highlighted the need for convergence of the Companies Act, 2013, and Listing Obligations and Disclosure Requirements of SEBI to avoid confusing shareholders.
The government has also opposed the panel’s proposal to increase the minimum number of directors on boards of listed companies to six from the existing norm of three, saying this would amount to additional cost for companies.”Before prescribing any such limits, a study of the top companies may be conducted,” the ministry said. The panel had recommended increasing the minimum number of board meetings to five a year, with one of these reserved to discuss strategy and budgets, among other issues.
It has proposed amending listing and disclosure norms to bring these recommendations to effect. However, the corporate affairs ministry said there is no need to increase the number of board meetings, as the Companies Act has a provision for this and changes could be introduced there. The panel on corporate governance also recommended enabling auditors to seek external opinion from experts if they aren’t satisfied with the views of the management of a listed entity. However, the government said it would be difficult.
