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‘Multiplicity of Acts scaring away people from a company’s board’

Our Bureau Chennai | Updated on January 26, 2020 Published on January 26, 2020

(From left) R Srinivasan, Regional Director, Institute of Directors - Chennai; Darrell Huntsman, CEO, Frost & Sullivan; PH Arvindh Pandian, Additional Advocate General of Tamil Nadu; MS Sundara Rajan, Chairman, IOD Chennai Region, and NK Ranganath, MD, Grundfos Pumps India, in Chennai on Saturday   -  Bijoy Ghosh

“Independent directors have to safeguard the interests of not just investors and promoters but also minority shareholders, bankers, employees and the customers,” said NK Ranganath, Managing Director, Grundfos Pumps India and a former Chairman of Confederation of Indian Industry (CII) - Tamil Nadu.

He was delivering a theme address at the inaugural session of the first edition of Directors’ Conclave organised by the Institute of Directors (IOD), Tamil Nadu and Puducherry Region, here on Saturday.

Speaking on the theme of the event, Boardroom challenges in the VUCA world, Ranganath said that the concept of VUCA — volatility, uncertainty, complexity and ambiguity — is not new to India which has been facing new laws, policies and business, every day over the last 70 years.

Noting that there are many inconsistencies in policy, Ranganath added that it has become an ‘ominous responsibility’ to be a member of the board after the advent of Companies Act, 2013.

“No wonder people are running away because the legal issues of being on a board, even if you are independent or non-executive director, can get you,” he added. Ranganath said that there is a trust deficit between the government and corporates.

“Today, having been on Boards for a long time, I cannot take a decision without calling lawyers and chartered accountants because there are around 250 Acts to understand,” said Ranganath.

Code of ethics

Ranganath highlighted the need for a code of ethics and good whistleblower policy to bring greater transparency in the business. In his special address, Raghavan Srinivasan, Editor, The Hindu BusinessLine, said: “Today, more than ever in the past, managements are facing a kind of electric shock from the environment in what i call a DC shock.”

He added, DC stands for Disruption and Compliance, which are the two biggest challenges faced by the Board members across the world. “So, in order to survive, you should become a disruptor before getting disrupted,” said Srinivasan.

Emphasising on the need to bring diversity in the boardrooms, Srinivasan said, “Women on board should not be a legal compulsion but it should be in your DNA.”

He also highlighted that the percentage of non-performing assets (NPAs) in India is among the highest in the world because in many cases companies have adhered to the letter of the law but failed to adhere to the spirit of the law.

Darrel Huntsman, CEO, Frost & Sullivan, said that a company’s long-term share value is mostly driven by its growth more than market share, profitability and its competitive advantage.

Sharing his three points to success, Huntsman said that resources (not just capital but also intellectual and people resources), making decisions today (in a very uncertain and ambiguous future) and adaptability are the three factors that will decide the growth of any organisation.

PH Arvindh Pandian, Senior Advocate and Additional Advocate General, Government of Tamil Nadu, in his address said that the word ‘spirit of the law’ has been going on for thousands of years.

“Be it technology, artificial intelligence (AI), laws, changes in the systems..it all brings us back to something called ethics and for Indians, ethics comes from our oldest of our texts,” said Pandian.

In his introductory address, MS Sundara Rajan, Chairman IOD Chennai Region and former CMD, Indian Bank, said that a lot of turbulence is taking place in the boardrooms these days.

Rajan said, “The number of independent directors who have submitted resignations during the relevant year is much more than the past year or in the historical past.”

The Institute of Cost Accountants of India (ICAI) was the Conference Partner while Hindustan Chamber of Commerce, Indo-German Chamber of Commerce, Indo-Australian Chamber of Commerce and Software Process Improvement Network (SPIN) - Chennai were the supporting partners.

BusinessLine was the media partner for the event.

Published on January 26, 2020
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