The Institute of Company Secretaries of India (ICSI) has released a handbook titled A Guide to Board Evaluation’, covering aspects such as evaluation of individual Board members like managing director, whole-time directors, non-executive directors, independent directors, chairperson, board committees and the entire Board. It also explains evaluation methodology, parameters of evaluation, besides Indian and international regulatory framework on Board evaluation.
This handbook, brought out as a part of the Companies Act, 2013 Series of the Institute serves three objectives — first, it not only sets out the regulatory and legislative framework for compliance but rather also explores and inform why these regulatory changes were important and made business sense. Second, it’s a combination of academic insight and practical application. Third, it entails the global experience. It was launched by M Damodaran, former chairman, SEBI at a seminar recently organised by ICSI on ‘Board Evaluation — Purpose and Process’.
The guide would be useful to the directors carrying out the evaluation and to the professionals advising the board in this regard. Board evaluation has been identified as an important governance challenge for quite some time especially due to the qualitative and softer aspects involved in the process of evaluation.
The Companies Act, 2013 as well as the listing agreement now mandates formal annual evaluation of the board, its committees and individual directors. Now that the companies have to report on Board Evaluation in their Board’s report for the year 2014-15, which are on the anvil, the guide is very timely.