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Letter to BS: Independent directors must push corporate governance

For corporate governance to improve, the IDs need to play a meaningful role

Business Standard 

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This refers to "Screening test for independent directors" (November 11). (IDs) have a significant role in improving They are expected to objectively participate in the decision making process at the board level. They are obliged to put their domain knowledge and rich experience to good use and help the board to take unbiased decisions for company's growth. Therefore, the mandatory condition of qualifying the online self-assessment proficiency test to get a place in the data bank for IDs seems a sensible move by the government. However, more than well qualified, the IDs should be objective in their assessment and not merely toe the management line. For to improve, the IDs need to play a meaningful role.

Here are a few suggestions, First, minority shareholders should have a substantial say in appointment of IDs, thereby discouraging the promoters to pick their favourites for the job. Second, IDs must have direct interactive and feedback sessions with senior and middle level management of the company. Third, in the annual report, the IDs’ views should find a place in the directors' report section. Forth, statutory auditors should consult IDs to get their point of views on important matters. Finally, the audit committee of a board should include at least one of the IDs as member.

As is the need of the hour, IDs should feel empowered to deliver.

Sanjeev Kumar Singh, Jabalpur

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First Published: Thu, November 14 2019. 21:25 IST