Letters to the editor dated March 5, 2021

This refers to ‘Boardroom blues’ (March 5). The slew of proposals from SEBI to strengthen the institution of independent director in listed companies and protect the interests of minority shareholders is welcome.

Known for their neutrality, vast knowledge and experience of company affairs, independent directors play a pivotal role in protecting the interests of minority shareholders and bolstering corporate governance.

In this context, the proposed steps such as the appointment or removal of independent directors need to be approved not only by majority of shareholders but also by majority of minority shareholders, tightening of rules to prevent independent directors from resigning on flimsy grounds and a minimum of one-third of board of directors in listed companies must be independent and non-executive directors merit imminent implementation. However, much needs to be done to prevent large listed firms, controlled by a family or a sizeable minority group, from appointing those close to the management as independent directors.

Sholavandan, TN

The role of independent directors can never be overemphasised. The most critical aspect needed for their success is complete freedom and their participation shouldn’t be seen merely as filling up the numbers on the board. In this context, SEBI’s latest move of sending a strong message to family-owned listed companies should be welcomed. But, at the same time, it should not be forgotten that these compliance burdens should not unnecessarily hassle those companies which do not have any wrong intent to hide or manipulate facts. One aspect that can be considered is to hold exit interviews of independent directors to try to assess the inside realities of the organisation and reasons for exit.

Noida

The stringent selection and compliance norms made applicable to independent directors, no doubt, is warranted considering the shortcomings in the governance standards of corporates. As a supportive measure, the MCA has provided independent directors much leeway such as not to indict them in civil/criminal offences suo moto . This is to motivate them act freely and explore ways and means to strengthen the corporate image. However, if the eligibility norms are made too rigid with imbalanced compensation, they may not come forward to offer their expertise, which would be detrimental to the interest of minority shareholders.

Bengaluru

This is with reference to ‘Designing a smart PLI programme’ (March 5). The article vividly brings to focus that under the Production Linked Investment scheme, there must be genuine value-adding industries that create jobs which require technical skill beyond the mere assembly of components. Achieving international competitiveness with augmentation of productivity must be the goal of PLI.

The recent Budget allocation for the electronic industry to manufacture semi-conductors in India to avert major import of semi-conductors from China is a welcome measure for creating genuine value-addition and more skilled jobs.

Sivakasi

This refers to ‘Syncing traditional banks with their challengers’ (March 5). The idea of replacing the traditional banking system with digital channels is appreciable. But our country is basically agrarian and a major section of the population still resides in rural and semi-urban areas.

There have been big improvements in using alternative channels in carrying out basic banking activities by the public. The government, too, has automated several monotonous and voluminous financial transactions — wages for MGNREGA workers, disbursal of pensions and automatic credit of LPG subsidy are but a few.

Chennai

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