No leeway for PSUs on Clause 49
SEBI chairman M Damodaran has ruled out flexibility for public sector companies in complying with Clause 49 of the listing agreement that deals with the appointment of independent directors. Government-owned companies should be on the same footing as private players when it comes to corporate governance, he said on Wednesday. Mr Damodaran also said institutional investors, including domestic mutual funds, would be allowed to start short selling from February 1. The statement comes a day after RBI gave its nod to the proposal to allow foreign institutional investors to lend, borrow and sell shares of Indian companies with some safeguards. Retail investors are already doing it, Mr Damodaran said on the sidelines of a seminar on corporate governance here. Short selling was banned in 2001 in the aftermath of the Ketan Parekh scam. Short selling implies selling borrowed shares in anticipation of falling prices. The Sebi chairman also said the regulator will review the 10% limit on stake held by directors or other shareholders to be considered as an insider for the purpose of the new insider trading norms. The regulator had said on Tuesday that purchase and sale of shares by insiders would be considered insider trading if the transactions happen within six months. Profits made through such deals have to be returned to the company, the regulator has said