Seventeen listed companies are without a single independent director on board.
An analysis of data from nseinfobase.com, a website tracking corporate data, shows that this marks a rising trend in recent years, after a sharp decline in the financial year ending March 2016 (FY16).
Several of these companies have gone bankrupt and are under the resolution process. Ownership issues are also among the reasons for companies not having independent directors, according to industry watchers.
Amit Tandon, founder, and managing director at Institutional Investor Advisory Services India (IiAS,) said that companies including recent cases such as those in the airline sector would have seen independent directors exiting as troubles mounted. A steeper penalty in many cases may force companies to address such gaps when they open up, according to him. Public sector undertaking (PSUs) present a more difficult case.
"None of the rules apply to PSUs as the regulations are not enforced," he said.
Pranav Haldea, managing director of corporate tracker Prime Database said that many of these firms are facing major business issues. However, the public sector is one segment which sees such instances even in the absence of financial troubles.
"Public sector companies have historically been non-compliant in terms of directorship. It is also not completely in their hands. They are dependent upon ministry approvals for appointments," he said.
An independent director is one who is not related to the promoter of the company. He is also supposed to have no direct business relationship with the company. Such neutrality allows him to consider the interests of all shareholders on company matters. Minority shareholders, in particular, are said to be better served by the presence of independent directors. Minority shareholders, including small retail investors, have less power than promoters to influence decisions because of the dispersed nature of their shareholding.