‘Separation of roles of non-executive chairperson, MD to create confusion’

April 8, 2018

The proposed separation of the roles of non-executive chairperson and managing director “will create confusion and conflicting situations for public-sector enterprises (PSEs) which may lead to delay in decision-making”, said the Standing Conference of Public Enterprises (SCOPE) on Thursday.

In March, the Securities and Exchange Board of India (Sebi) had accepted bulk of the recommendations of the Kodak Committee on Corporate Governance, including the one pertaining to separation of the chairman and the CEO or managing directors posts for the top 500 listed companies by market capitalisation from April 2020.

“Alternatively, in order to make governance simpler, transparent and accountable, a sovereign holding structure could be considered for PSEs wherein a flatter structure would prevail so as to consolidate multiple synergic PSEs into a single sector implying simpler and measurable governance along with advantage of economies of scale, greater negotiating powers, higher value of assets etc,” said UD Choubey, DG, SCOPE, an apex body of PSUs.

Choubey was a member of the Kodak Committee. SCOPE has urged the government to give due consideration to the clause on separation of CMD posts when SEBI submits the report to Government, he said.

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