Letter to BS: An in-depth study of role of outside directors is needed

We need to educate the promoters on how to involve them even if they have divergent views

Apropos “Promoting good governance” (June 28); the authors have rightly emphasised on moving away from compliance or survival requirements. The most difficult part in ensuring corporate governance, in my experience, has been the role of outside directors on the board. Of course, they are hand-picked by the main promoter. But the proceedings in the board are essentially in accordance with the promoter’s wishes — to endorse than to suggest. If there are any views that run on different paths, they are generally to be mentioned during informal meetings outside the board. 

The outside director is mainly expected to collect the fees and endorse the views of the main promoter. The culture in many boards is to endorse the proposals of the management. We need an in-depth study of the role of outside directors and educate the promoters on how to involve them even if they have divergent views. After a couple of differences with the board, one tends to leave. This is where the professors may like to do some further research by interviewing prominent outside directors and widely publish the results.

Sudarsanam Padam  Hyderabad

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