Dissent, don't be honorary appointees: Sebi chief to independent directors

Sebi Chairman urges independent directors to evolve from passive critics to active stewards, highlighting AI, ESG, and whistle-blower oversight as urgent board priorities

The Securities and Exchange Board of India (Sebi) has urged corporate boards to rethink their functioning, warning aga­inst treating governance as a box ticking compliance exercise. 

Speaking at the 2025 Annual Directors’ Conclave organised by the Institute of Directors, Sebi Chairman Tuhin Kanta Pandey said independent directors can no longer be “honorary appointees” or “friendly critics” — they must evolve into active stewards of accountability. 

Governance should not be a checklist — but should be treated as breathing value, Pandey said. He noted that while boards often spend significant time poring over compliance packs, they rarely debate signals about organisational culture. 

 

“Independent directors may have a seat at the table — but are they truly being heard, or merely counted? We have diversity on paper, but do we have diversity of thought?” he asked. 

Pandey flagged the growing gap between how companies operate and how boards oversee them — citing examples of startups going public with soaring valuations but profit history, or AI models making pricing and hiring decisions. 

“Markets are no longer driven purely by financials. Stakeholders now ask: What do you stand for? What are you doing for the planet, for your people and for the public trust,” he stressed, urging conversations on succession planning and whistle-blower trends. 

The Sebi chief pressed for diversification in independent director appointments — across experience, sectors, and demographics — backed by ongoing orientation on AI governance, cyber threats, and ESG disclosures. 

“Independent directors must feel free to dissent. To question, if the information is not robust,” Pandey said. 

He also advocated adopting digital tools to strengthen governance. 

“Today’s boards can and should demand real-time dashboards that provide meaningful insights - not just volumes of PDF reports. Imagine dashboards that track red-flag employee exits, whistle-blower complaints, ESG trends, or vendor concentration risks — and bring them to the board’s attention before they hit the news,” he said. 

The board as a ‘team of navigators’ 

Using a maritime analogy, Pandey likened companies to ships with the CEO as captain and the board as compass: “…But imagine that ship not steered by one captain, but a team of navigators — each with different instruments, different vantage points, and a shared duty to keep the journey safe, legal, and honourable. That team is the board,” he said.

 

Over the years, Pandey noted, Sebi has “progressively deepened” its corporate governance framework, detailing requirements for board composition, independence, and the operation of key committees — including audit, nomination & remuneration, and risk management.