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For India Inc, board evaluation still at nascent stage: Study

Press Trust of India  |  New Delhi 

Indicating that board evaluation exercises are still at a "nascent stage", just over 50 out of the top 100 NSE-listed entities have reported both the criteria and the process for such evaluations, says a study.

Under the Companies Act, 2013, listed and public firms with paid-up share capital of Rs 25 crore or more are required to conduct board evaluation exercise.

"Five companies got three-star rating, the highest rating given to the select group of companies. These companies disclosed positive results of their evaluation in addition to the evaluation criteria and evaluation process," the study, released today, said.

It was done by CimplyFive -- which provides research and technology-based solutions for compliance with Companies Act -- and proxy advisory firm InGovern Research.

They have developed a proprietary five-star rating system for board evaluation and the same was applied for top 100 companies on the National Stock Exchange (NSE).

Out of them, at least nine companies availed the services of an external consultant for board evaluation process.

"52 companies got two-star rating, as they reported both the evaluation criteria and the evaluation process... 26 companies got one-star rating, as they reported either evaluation criteria or evaluation process," it said.

According to the study, three companies did not do board evaluation despite the mandate.

"17 companies were exempt from Board Evaluation being public sector companies. Despite exemption, three of them shared their evaluation process, criteria or outcome," it added.

CimplyFive Founder and Chief Executive Shankar Jaganathan said, "board evaluation is at a nascent stage in India and its potential untapped".

"Initiatives on corporate sustainability remain incomplete without a well-defined board evaluation practice in place," he noted.

InGovern Research Managing Director and Chief Executive said that boards should take board evaluation exercises seriously and not just consider it as a regulatory requirement to be fulfilled.

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First Published: Mon, May 30 2016. 17:48 IST