Financial Daily from THE HINDU group of publications
Tuesday, Feb 15, 2005
Financial Daily from THE HINDU group of publications Tuesday, Feb 15, 2005 |
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Corporate
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Corporate Governance `Proper training for independent directors must' Our Bureau
Mumbai , Feb. 14 INDEPENDENT directors play a crucial role in ensuring good corporate governance practices. They should be `independent' of management and free of material financial interest; and they should be perceived to be so by the stakeholders, said Mr R. Ravi, President, Institute of Company Secretaries of India (ICSI). Talking at a seminar here today on `Leveraging Independent Directors' organised by the Centre for Corporate Research and Training of ICSI, Mr Ravi said that over and above being a person of eminence and high integrity, an independent director needed to be properly trained. The rationale of having independent directors on the board of a company is to keep a special eye on the activities of a company so that it works ethically in the interest of all the stakeholders. A critical element of a director being independent is his independence to the management - both factually and in the perception of the public, he said. "In other words, the independent directors must not only be independent according to the legislative and stock exchange listing standards, but also qualitatively independent. They should serve as investor advocates in the boardroom and be able to stand up to management as appropriate," Mr Ravi said. Mr Shailesh Haribhakti, who inaugurated the seminar, said there was great need to bring back the trust of the investors. The induction of Independent Directors on the Board (of companies) is a positive step in that direction, he said. The concept of independent directors has been gained momentum in the business circuit after the amendment of Clause 49 of the Listing Agreement dealing with corporate governance. Good corporate governance practices are becoming a major factor in enhancing the shareholder value and market capitalisation of a company and it is now being argued by researchers that share prices of companies with good corporate governance parameters often enjoy a premium.
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