In February 2024, Securities and Exchange Board of India (SEBI) issued a directive requiring all hashtag#independentdirectors (IDs) who wish to resign citing ‘personal reasons’ to explain their continued presence on the boards of other companies. This is a welcome move that aims to ensure transparency when IDs step down from listed boards.
While this initiative is commendable, as it encourages IDs to perform their duties diligently, I wonder if IDs will truly be forthcoming about their reasons for departure. In India, IDs have often been criticized for not standing firm or taking strong positions against management. This issue isn’t unique to India, but it seems more pronounced here.
For our companies to compete hashtag#globally, local management must genuinely value the experience and critical insights that IDs bring. Embracing their input in the right spirit is crucial for meaningful governance. Rules and regulations can guide behaviour, but true compliance in spirit is what will drive real change.
It’s time other professional institutions like The Institute of Company Secretaries of India/ The Institute of Chartered Accountants of India/ Indian Institute of Management Mumbai and others come forward to support SEBI in creating a strong awareness about hashtag#governance and the role of independent directors. This cannot be a one-time activity; it has to be a continuous core discussion around anything that relates to governance and growth.
Let’s hope this directive leads to a more transparent and effective corporate governance landscape.