May 14, 2021 3:00:33 am
While Indian companies understand that they need to refresh their boards to meet the regulatory timelines, the pace of board refreshment continues to remain slow, Institutional Investor Advisory Services (IiAS) has said in its latest study on the board composition of Nifty 500 companies as on December 31, 2020.
The firm has noted that a balance needs to be struck between board refreshment and board stability; yet Indian boards seem hesitant to let go of their tenured independent directors (IDs).
“In this environment, though, the Tata Group has decided that none of its listed companies will have an independent director with a tenure in excess of 10 years — well ahead of the 2024 regulatory deadline. Corporate India needs more of such progressive thinking,” the advisory firm said.
Board composition in India is driven by regulations — depending upon the chairperson, boards may comprise one-third or half as independent directors.
As per its findings, the total number of IDs have fallen in 2020 compared to 2019 and 2018. This reduction can mainly be attributed to the fall in number of IDs in PSUs. The other reason for the decrease in IDs has been the churn in companies forming part of Nifty 500 over this period. —FE
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