Independent directors in India are mostly felt to be an extension of the promoter group or those playing ball to the whims of the controlling shareholder in listed enterprises. To require them to dispassionately serve the interest of minority shareholders in corporate boardrooms will be a big ask. Nearly a month after the new SEBI Chief Ajay Tyagi expressed anguish over the lack of ‘independence of independent directors’ in India Inc, help is at hand. Market regulator SEBI has now tasked its newly appointed corporate governance committee (for listed companies) to come up with recommendations for “ensuring independence in spirit of independent directors and their active participation”.
This seems to be a big demand on the committee itself. The task is cut out for the Uday Kotak headed panel as the credibility of the institution of independent directors itself is under threat, both on the public and private sector front. What is needed is a surgery and not mere band-aid. The moot point is how independence can be ensured in boardrooms, if independent directors are appointed only with the approval of controlling shareholders. Their continuation in Boards depends on the whims of the controlling shareholder.
Tyagi had soon after he assumed charge as SEBI Chairman rued that many Independent directors had no commitment to any cause. Some independent directors are at the mercy of promoters, he had pointed out at an industry event. Tyagi had then admitted that he does not have a solution to fix the lacunae. Hence, appointing a corporate governance committee to look into this aspect among other issues is a good step forward. Hopefully, the Kotak-led Panel will come up with recommendations which strengthen the voice of independent directors in the boardrooms.
Deputy Editor