MMTC Ltd, a frontline state-owned trading company that is listed on the bourses and has public shareholders, is operating without a full-time chairman and managing director for almost the last four years, ever since the vacancy arose at the helm on October 1, 2010.
The trading firm is no exception. The posts of chief executives were vacant in 33 other state-owned firms as on July 15, including Coal India Ltd, a public sector company with a market capitalisation of over Rs 2,42,000 crore (as on August 1), BSNL, NHPC and railway unit IRCTC.
Reasons include the scrapping of recommended panel of candidates by the government, delays in obtaining vigilance clearance or approval of competent authority and court cases filed by those lower down in the empanelment process.
In addition, the decision of the concerned administrative ministry to keep a particular post in abeyance in several of these cases has lead to prolonged delays.
In its intervention against large-scale vacancies at the helm of PSUs, the Centre has readied a computerised monitoring system to track the processing of appointments to the Board level posts in Central Public Sector Enterprises (CPSEs) to tackle the festering problem. Another software has been developed to monitor the processing of proposals before the Appointments Committee of the Cabinet.
The interesting aspect is that under the new Companies Act 2013, delays in appointments at the helm of companies are in violations of the provisions of the legislation. Appointment of key managerial personnel, which includes a managing director (MD), chairman or chairman-cum-managing director (CMD), is central to the enforcement of corporate governance norms as provided in the new Companies Act, 2013.
In the earlier Companies Act 1956, an exemption was made for government companies, which were exempted through a notification of January 1978 on the specific clause of having a full-time person at the helm (MD or whole-time director or manager).
The CMD’s post is lying vacant in ONGC Videsh, Power Finance Corporation, Hindustan Photo Films Manufacturing Company, Hooghly Dock and Port Engineers, MTNL, and Hindustan Cables, according to data from the department of public enterprises updated till July 15.
The MD post is vacant in HMT Chinar Watches (since January 2009), Ferro Scrap Nigam, Dedicated Freight Corridor Corporation of India, Central Cottage Industries Corporation of India, among others.