Every private sector company must have the powers to appoint its own independent directors, said Mr Rahul Bajaj addressing a CII session on Governance in Mumbai on Tuesday.

“The government's distrust of promoters should go,” he said. According to him, the damage done by five per cent of the promoters has resulted in excessive regulation which stifles the rest who are doing business honestly.

Only a handful of Indian companies have the wherewithal to compete globally and if the government wants to foster entrepreneurship and innovation it should do so using minimal regulation, said Mr Bajaj.

Badly managed companies will see an exodus of customers followed by shareholders. If they don't that means the company's management is doing things the right way. Good companies know, especially after the credit crisis of 2008, that their reputation is on the line and only performance is rewarded

On independent directors, Mr Bajaj said that an individual should not be on more than a dozen boards as it would be physically impossible to do justice to the role he is required to play. Directors with a reputation of their own would never like to tarnish theirs at the cost of a company that is badly governed.

Many companies have a whistleblower policy but this will succeed in practice only if the whistleblower has the confidence in the top management that he will be listened to and finally acknowledged for his contribution, and not be misunderstood.

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