A panel appointed by SEBI to suggest ways to improve the corporate governance standards of listed companies will also recommend measures to improve Board evaluation practices.
Corporate Board Evaluation is a concept new to the country, having been made mandatory for all listed companies only with the advent of the Companies Act, 2013. It is also mandatory for public companies with paid-up capital of ₹25 crore or more.
The new company law required these companies to annually evaluate its Board performance, that of its sub-committees and individual directors, and record the same in the Director’s report to members.
In 2003, Narayanamurthy panel on corporate governance, another SEBI appointed committee, had recommended ‘Corporate Board Evaluation’ as a non-mandatory provision for listed companies.
Several listed companies in India including Bharti Airtel, Cipla, Ashok Leyland and Godrej Consumer have been using external consultants to evaluate their Boards.
On independent directorsThe latest SEBI-appointed Corporate Governance Panel — headed by Uday Kotak, Vice-Chairman and Managing Director of Kotak Mahindra Bank — will also help address issues faced by investors on voting and participation in general meetings.
It will also look into issues in accounting and auditing practices by listed companies.
Besides these issues, the panel has been tasked with coming up with recommendations for “ensuring independence in spirit of independent directors and their active participation in functioning of the company”.
Independence of independent directors is among the weakest links of listed companies in India. Despite efforts in the past two decades, this aspect has still not been squarely addressed by regulator and policymakers, say observers.
Star-studded panelSome high-profile members of the Uday Kotak-headed panel are Keki Mistry, Vice-Chairman & CEO of HDFC Limited; Rishad Premji, Chief Strategic Officer and Member of the Board, Wipro Ltd; and R Shankar Raman, Wholetime Director and CFO, L&T.
Ashish Chauhan, CEO, BSE and J Ravichandran, Acting CEO, NSE are also members of the panel.
Apex industry associations Confederation of Indian Industry (CII) and FICCI are represented by their Presidents Shobhana Kamineni and Pankaj R Patel respectively.
From the professional institutes front, Nilesh Vikamsey, President, CA Institute and Shyam Agrawal, President, Company Secretaries Institute form part of the panel.
N Venkatram, Managing Director & CEO, Deloitte and Arun Kumar, Chairman & CEO, KPMG are also part of this committee.