In need of another Goliath

Essar: Goliath was the code name given to Essar Energy by bankers working on its flotation. An extra Goliath on the board is exactly what the company which is on track to become a member of the FTSE 100, needs. Essar Energy will be dominated by India's Ruia family, which will retain a 75 percent stake via its Essar Group, as well as appointing its chairman and vice-chairman. To give outsider investors confidence that their interests will be protected, another strong independent director is needed.

Essar Energy's current seven-member board has four independent directors. That exceeds the requirements of the UK's combined code. Yet two of the independents are Mauritian nationals — a requirement of Essar Energy's tax residency on the island — with no experience at UK publicly listed companies.

The two remaining independent directors - Simon Murray and Philip Aiken -- are well regarded. But, that doesn't sound much of a bulwark, given that Ravi Ruia will chair the company, his nephew Prashant Ruia will be vice-chairman and Naresh Nayyar, who has held the same position at Essar Oil since 2007, will be chief executive.

Essar Energy has pledged to appoint another independent director with relevant UK market experience. Investors won't know who that is before they have to stump up cash for the IPO. This really is a far from ideal way of doing things.