Independent Directors to improve transparency
November 13, 2019
13th November 2019, Mumbai | Speaker : Mr. Ranga Iyer & Mr. Kewal Handa
The Government of India has been working overtime to bring transparency in the working and management of corporate boards. The institution of Independent Directorship, over the course of last 5 years moving to achieve this statutory objective.
The tenth edition of “Perspective” a unique CXO round table panel discussion was organized by Sapphire Human Solution on 13th November 2019 at Grand Hyatt, Mumbai to discuss the opportunity to rise to a corporate board as an independent director. The Panel was lead by distinguished corporate leaders Mr. Ranga Iyer & Mr. Kewal Handa, joined by 18 other CEOs, Managing Directors, CXOs from companies of diverse industries.
The discussion covered composition of the boards, role of an Independent Directors, selection and appointment of the directors, Board Committees and their role. It is an advantage for the people who are already working as part of the executive management in a company as they have experience of managing a company and are already aware about the functioning of the board. The Government has now tightened the norms of who can become an independent director and also plans to implement a written test to prequalify the prospective candidates, this has lead to a big exodus of Independent directors, creating an opportunity for the current CXOs.
The developments in the boards of various companies over last couple of years triggered a heated discussion on the role of Independent Directors in bringing transparency and compliance to the board. Firstly the objective of one to become an independent director should be to bring the best practices and experience to the management of the board and secondly, one should be prepared to bring a change in the strategy and policy of the company & board, dominant attitude of the promoters in favor of a compliant & independent board. Thirdly one has to perform an advisory role to all the matters to reported to them.
The role of committees were also discussed especially the audit committee, the CSR Committe and the nomination & remuneration committee(NRC), the matters related to compliance fall under the audit committee, selection of the members of the board and executive team is the domain of NRC. Companies now need to have an established whistleblower policy, in its absence, the concerns can be raised to the head of audit committee, who is always an independent director. The CSR committee, which is also led by an independent director, plays an important role in deciding the CSR initiatives to be undertaken by the company.
The institution of independent directorship needs to be built like a community so as to bring in values and consciousness to the working of a board as well as best practices from across the globe. The success of a board will percolate into the values systems of a company.