New Delhi, March 26: The government on asked all the 246 central public sector enterprises to mandatorily follow corporate governance norms and business ethics, a step to ensure more transparency in their functioning.
The decision to make these norms binding on the CPSEs, both listed in the stock market and unlisted, was taken by the Union Cabinet.
“The guidelines on corporate governance have now been made mandatory and are applicable to all CPSEs,” the Department of Public Enterprises (DPE) said after the Cabinet meeting.
Norms, introduced in June 2007, were voluntary in nature for a period of one year on trial basis.
However, “in the light of the recent events in the corporate world, the continued need for adoption of good corporate governance principles have been reinforced,” the DPE said.
The role of directors and auditors had come in for scrutiny after the unraveling of the multi-crore Satyam fraud in 2009.
The government felt that while the principles of corporate governance (CG) apply equally to both public and private sectors, “there was a continued need to adopt and apply the good CG practices in respect of CPSEs where huge public funds are invested,” it said.
The guidelines cover issues like composition of boards of CPSEs, formation and role of audit committees, functioning of the subsidiary companies, disclosures, code of conduct and ethics, risk management and reporting.
The guidelines have been improved in the wake of the experiences gained during the experimental phase of one year.
The fresh norms include additional provisions relating to monitoring of the compliance of guidelines by CPSEs and formation of a remuneration committee.
The DPE said implementation of these guidelines will facilitate interest of shareholders and ensure transparency in their operations.
Govt nod to set-up knowledge network
Government also approved a project to connect 1500 educational institutes across the country through high speed data communication network.
A meeting of the Cabinet Committee on Infrastructure, chaired by Prime Minister Manmohan Singh, approved the establishment of the National Knowledge Network (NKN) at an outlay of Rs 5,990 crore to be implemented by the National Informatics Centre over a period of 10 years, an official spokesperson said.
“The NKN will have about 25 core Point of Presence (PoPs) and 600 secondary PoPs. It will connect around 1500 institutions,” she said adding that the setting up of core network is expected to be completed in a span of 24 months.
On 21st January, the CCI had given its in-principle approval to the project which is one of the recommendations of the National Knowledge Commission (NKC).
The network is expected to encourage sharing of knowledge, specialised resources and collaborative research.
The NKN was announced by the then Finance Minister P Chidambaram in his Budget speech of 2008-09.
—Agencies