Department of Public Enterprises (DPE) formulates policy guidelines on the Board structure of CPSEs. In pursuance of the public sector policy being followed since 1991 several measures have been taken by the Department of Public Enterprises to professionalize the Boards of public enterprises. The extant guidelines provide that outside professionals should be inducted on the Boards of CPSEs in the form of part-time non-official Directors and that the number of such Directors should be at least 1/3rd of the actual strength of the Board. In the case of listed CPSEs headed by executive Chairman, the number of non-official Directors (Independent Directors) should be at least half the strength of the Board.
The proposals for appointment of non-official Directors are initiated by the concerned Administrative Ministries/Departments. The selection of non-official Directors in respect of all CPSEs is made by the Search Committee which presently consists of Secretary (DoPT) as chairperson, Secretary (DPE), Secretary of the administrative Ministry/Department of the CPSE and 2 non-official Members. The concerned Administrative Ministry/Department appoints the non-official Directors on the basis of recommendations of Search Committee after obtaining the approval of competent authority.
As regards selection and appointment of non-official Directors on the Boards of CPSE, the following eligibility criteria has been prescribed:-
Criteria of Experience
(i) Retired Government officials with a minimum of 10 years experience at Joint Secretary level or above.
(ii) Persons who have retired as CMD/CEOs of CPSEs and Functional Directors of the Schedule ‘A’ CPSEs. The ex-Chief Executives and ex-Functional Directors of the CPSEs will not be considered for appointment as non-official Director on the Board of the CPSE from which they retire. Serving Chief Executives/Directors of CPSEs will not be eligible to be considered for appointment as non-official Directors on the Boards of any CPSEs.
(iii) Academicians/Directors of Institutes/Heads of Department and Professors having more than 10 years teaching or research experience in the relevant domain e.g. management, finance, marketing, technology, human resources, or law.
(iv) Professionals of repute having more than 15 years of relevant domain experience in fields relevant to the company’s area of operation.
(v) Former CEOs of private companies if the company is (a) listed on the Stock Exchanges or (b) unlisted but profit making and having an annual turnover of at least Rs.250 crore.
(vi) Persons of eminence with proven track record from Industry, Business or Agriculture or Management.
(vii) Serving CEOs and Directors of private companies listed on the Stock Exchanges may also be considered for appointment as part-time non-official Directors on the Boards of CPSEs in exceptional circumstances.
Criteria of Educational Qualification
Minimum graduate degree from a recognized university.
Criteria of Age
The age band should be between 45-65 years (minimum/maximum limit)
This could, however, be relaxed for eminent professionals, for reasons to be recorded, being limited to 70 years.