At a legal level, there’s no distinction. A listed PSU follows the same Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and the Companies Act, 2013 as any other listed company. The rulebook does not create two categories.

But practice tells a more nuanced story.

In listed private companies, compliance is commercially urgent. If a Director resigns, the vacancy is filled quickly. Investor scrutiny, proxy advisory pressure, and potential valuation impact ensure that delays are costly — and visible.

In PSUs, the situation can be more layered. Appointments, particularly of Independent Directors, move through Government channels. Files travel. Approvals take time. Meanwhile, the listed entity remains technically responsible, even if it doesn’t fully control the timeline.

The gap isn’t legal — it’s structural.

Then comes perception. With the Government as majority shareholder, there may be an assumption that enforcement will be softer or that markets will be more patient. Whether true or not, perception shapes behaviour. Over time, compliance risks becoming a checklist exercise rather than a boardroom priority.

Ironically, PSUs operate under more oversight than most listed private firms — Ministries, CAG reviews, Parliamentary scrutiny, vigilance mechanisms, and sector Regulators. Yet market discipline works differently. Private firms worry about activist investors and stock price reactions. PSUs often feel less immediate market heat.

So, is this advantage? Usually not. More often, it’s structure-induced systemic inertia — where appointing authority, policy direction, and accountability sit in different silos.

But from an investor’s standpoint, the explanation may be secondary.

Markets evaluate governance by outcomes, not process constraints.

Explore corporate governance practices being followed by Maharatna and Navratna companies in our 5th Edition of Corporate Governance Survey.

–  Mahima Chopra