30 December 2008

Satyam - Board of directors quorum

A piece in the Times of India quotes an anonymous source in the Ministry of Corporate Affairs commenting on Clause 49 of the Listing Agreement - saying the Board meeting of Satyam will not be able to take place in the absence of a majority of directors being independent. Various other papers have started writing opinion pieces based on this assumption. This is, of course, bunkum.

If this was true, most of the public sector listed companies would be virtually shut down as they have not complied with the requirement for the last three years and they wouldn't be able to operate. More technically, SEBI has explicitly provided for a 180 day period within which the vacancy needs to be filled. Here is the SEBI circular. Companies Act does not provide for any quorum of independent directors for Board of Directors' meetings, and the listing agreement which does, gives a long rope.

2 comments:

ash said...

how come there is no provision in companies act regarding quorum,
the writer is requested to not to quote any misleading information. may go thru provisions from 283 to 287 again of the companies act, 1956 for clarity.

Sandeep said...

I was talking of quorum of independent directors - have corrected the incorrect impression.