Securities and Exchange Board of India (SEBI) has recently released a consultation paper to solicit comments from public on the proposal to review provisions relating to Independent Directors (IDs) on the board of listed companies.
IDs play an important component in the overall framework of Corporate Governance. The Audit Committee of the board is mandated to have at least two–third of Independent Directors. Besides, IDs are also expected to bring in independent judgement on the Board’s deliberations especially on issues of strategy, performance, risk management, resources, key appointments and standards of conduct; as well as bring an objective view in the evaluation of the performance of board and management.
However, concerns around the efficacy of independent directors as a part of corporate governance framework continue. Hence, there is a need to further strengthen the independence of IDs and enhance their effectiveness in protection of the interest of the minority shareholders, and other functions. Accordingly, proposals including broadening the eligibility criteria for IDs, the process of appointment / re-appointment and removal of IDs, enhancing transparency in the nomination and resignation of IDs, etc. are proposed for public consultation.
In this regard, we request you to send your inputs/ views on the proposals March 20, 2021 to tejasvi@nasscom.in in the following format:
| S.No. | Proposal | Suggestions | Rationale |
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