21 October, 2020

Parsley On The Fish

Majority of outside directors on boards of Indian companies are mere rubber stamps.

Parsley On The Fish
outlookindia.com
-0001-11-30T00:00:00+05:53

One day at work, you get a call from a CEO friend who requests you to be a non-executive director (NED) in his company. A quick check on the number of directorships you already hold (10) and your work schedule and you agree. After all, your friend is a good chap-you were in college together-and his company is well known. Besides, the board meetings will be in Bangalore, where your daughter is studying. Five-six round trips per year by J-class, night stays at Taj Westend, two hours in a ritualistic board meeting followed by an excellent lunch, and the rest of the afternoon with your daughter. What's wrong with that? You've earned it, haven't you?

By and large, this describes the so-called 'independent' NEDs gracing the boards of listed companies. An NED is technically independent insofar as he is not (a) a former executive of the company, (b) a large customer or vendor, (iii) the company's legal advisor, solicitor, management consultant or chartered accountant, (iv) a relative of the promoter or any ED, and (v) holding a significant stake or representing a major...

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