While there is all hullabaloo about drivers and accountants being on boards of companies, it emerges that even top notch directors in top listed companies hardly do any work.
19% of the directors on an average attended less than 75% of the Board meetings, a recent analysis by proxy advisory firm Ingovern Research Services has found.
“Maruti Suzuki, Ashok Leyland, Cummins India, Exide Industries, Shriram Transport and United Phosphorus had more than half of its directors attending less than 75% of the Board meetings. As a corporate governance best practice, InGovern recommends that shareholders vote against re-appointment of Directors who attend less than 75% Board, AGM or committee meetings or have not discharged their duties as director. Since last year, the MCA has allowed attendance of a director by video or telephone to be recognised as a presence at a board meeting,” a report by the advisory said.
Shriram Subramanian, Founder and MD of InGovern said, “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 CG practices in the right spirit. Institutional investors and regulators should demand better practices from promoters and company management. The new Companies Bill is a small step in the right direction.”
The report added that the number of Board meetings held by companies in the Nifty and Junior Nifty indices was, on average, approximately seven. Clause 49 of the Listing Agreement mandates listed companies to have at least four board meetings in the year, with a maximum gap of four months between two meetings. 59 companies held between four and seven meetings and the remaining 41 companies had more than seven meetings.
The total number of resolutions proposed in the 2012 proxy voting season by companies, which formed part of the coverage universe (588 companies of the S&P 500 and BSE 500 indices) was 4,271 resolutions. Of this, 481 resolutions were proposed by Nifty companies, 384 resolutions were proposed by Junior Nifty companies, whereas the remaining 488 companies forming part of the S&P 500 and BSE 500 indices proposed 3,406 resolutions in total. A month wise analysis of the resolutions proposed in 2012 is below, with the peak being in September 2012, as companies have to conduct AGMs within six months of financial year ending March 31.
Directors without direction
|Corporate Governance Structure of Top 100 (Nifty and Junior Nifty) Companies|
|10% of companies have board sizes of either more than 16 directors or less than seven directors|
|9% of companies were non compliant with Clause 49; with less than 50% Independent Directors, and no Independent Chairman|
|One in five Directors attend less than 75% of Board Meetings|
|9% of Independent Directors have outside directorships in more than 10 public companies|
|22% of IDs have served on the Board for more than nine years|
|Audit Committees of 45 companies comprise only of Independent Directors|
|13 companies have not constituted a remuneration committee|
|53 companies have had the same Auditors for more than five years|