Independent Directors walking on thin line for better performance
Mumbai, 26th June 2019: The fifth edition of Perspective a unique initiative of Sapphire Human Solutions was held on 7th June 2019 at Hotel Sofitel, Mumbai. The panel discussion was led by Ms. Apurva Purohit, President Jagran group and Mr. Ranga Iyer, Ex. MD of Wyeth Ltd., Ms. Mansi Bansal, PwC moderated the discussion. Around 20 corporate leaders from different companies participated the panel discussion.
There is now a constant tug of war between the promoters and directors on one side and Independent directors on the other, the corporate India is trying to re-engineer a new paradigm which could change the way boards and businesses are managed. Transparency is the new norm in corporate decision making and the Independent directors are responsible to represent and defend minority stake holders. The independent directors are walking on a thin line to perform their statutory duties balancing it with self preservation. The developments in last couple of years have brought the focus on the role and responsibilities of an Independent director and have also brought them in the purview of legal ambit and consequences.
Ms. Purohit opened the discussion talking about how the company loyalty triumphs over the integrity whereas the basic premise of appointing an independent director is to get a neutral view, the concept of independent director is new in India and it will take more time for the corporate to come to terms with it.
Mr. Iyer shared his personal experience of 20 years on board of directors, both as an executive as well as independent director and advised to be cautious and acquire necessary knowledge of the businesses and boards they plan to onboard. The law allows for 7 boardship, ideally 3-5 boardship should be the maximum one should opt for.
The qualification of an opportunity to become an independent director got lot of impetus, how to qualify a company upon the information received from the company and other sources, which can be reliable or unreliable. Speaking to current as well as retired directors is one of the ways but still not foolproof.
Once on board, what is the responsibility of an independent director, statutory to represent the minority stakeholders? But a company would appoint a specific individual to the board for the skill, knowledge, expertise or experience he or she brings to the board. The key role of an independent director would be advisory and not executive and the statutory responsibilities arises where he finds omissions or commissions detrimental to the interest of the minority stakeholders, which may be even against set business norms or even laws.
The last major discussion was about appointment of women independent director to the boards, there has been a general lack of respect of the abilities of women independent director, it is sole because of the corporate & social culture where women are not considered as at par with men. The onus is now on the HR teams to create cohesive teams and create equal opportunities, today the women have climbed the executive ladders to reach the top and have proved themselves to be no less than men in diverse portfolios and they are here to create their indelible mark in the field of corporate governance.
The discussion concluded on a positive note that the changes and new development are good signs towards the improvement of corporate governance and it was resolved to jointly and severally create awareness and guide the aspirants to the corporate board.