Indian companies have a long way to go before adhering to corporate governance best practices, as their performance is below-par on parameters like rotation of auditors, attendance of directors and board composition, a study has said.
An analysis of the top 100 companies that form part of the Nifty and Junior Nifty indices shows that 10% of these firms have board sizes of either more than 16 directors or less than seven directors.
The Companies Act, 2013 prescribes a minimum of three and maximum of 15 directors on the board of a company and permits firms to appoint more than 15 directors after passing a special resolution.
According to a report by InGovern Research Services based on proxy voting disclosures, 17% of directors on an average in these 100 companies attend less than 75% of board meetings.
Average number of board meetings held by top 100 Indian Companies is seven.
It further said that 13% of companies taken into consideration were non compliant with Clause 49 of the 'Listing Agreement' with less than 50% Independent Directors on their board.
The report said that 22% of Independent Directors have served on the board for more than nine years.
"Corporate India has a long way to go before adhering to corporate governance best practices. The data stands out with even top companies not treating corporate governance practices in the right spirit. Institutional investors and regulators should demand better practices from promoters and company management.
The new Companies Act and initiatives from Sebi to improve corporate governance are steps in the right direction," InGovern Founder and MD Shriram Subramanian said.
Besides, 36 companies have had the same auditors for more than 10 years, while the new Companies Act, 2013 prescribes a mandatory rotation of audit firm for listed companies post 10 years.