Coal India is staring at a potential violation of listing norms even as it moves towards a 5% stake sale by the government.
Clause 49 of the listing agreement requires that in case the chairman is an executive director (which is the case in Coal India), at least half of the board should comprise of independent directors.
But Coal India hasn’t had any independent director since the tenure of six – R N Trivedi, Sachi Chaudhuri, Md Anis Ansari, K Barua, Sheela Bhide and Kamal R Gupta – ended in August.
“Coal India might face serious questions regarding its corporate governance practices if it fails to fill up the posts of independent directors soon,” said a partner in Deloitte, requesting anonymity.
The world’s largest coal miner, which has just began global roadshows for the disinvestment, has already flagged the issue. “In accordance with the provisions of our Articles of Association, the President of India, acting through the ministry of coal, is in the process of appointing independent directors on our board. Depending on the timing of such appointments, it is possible that we may not be compliant with the requirements of Clause 49 of the listing agreement until such appointments are completed,” it said in a presentation.
The listing norms also require that “an independent director who resigns or is removed from the board shall be replaced by a new independent director within a period of not more than 180 days from the day of such resignation or removal”.
So, Coal India needs to recruit at least one independent director soon, to replace AK Rath whose term ended on April 26.
For the other vacancies of independent directors, the company has some time in hand. However, it is staring at delays in key decisions, including approval of financial results for the quarter ended September. The earnings announcement is slated for November 21.
Source:- dnaindia.com
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