Around 95 per cent of independent directors on boards of various companies do not have their roles clearly defined at the time of appointment, says a study.
While 50 per cent of the independent directors surveyed felt that their roles and responsibilities were not defined in the appointment letter, a whopping 95 per cent of them said their work load was not mentioned in the letter, according to India Board Report, 2015-16.
The Companies Act, 2013, prescribes a code of conduct and other duties for independent directors. This code places a significant onus on independent directors to assist in safeguarding the legitimate interest of the company and its stakeholders.
The study covers the boards of over 500 companies comprising a representative set of Indian, MNC and public sector companies. It has been prepared by a talent and board advisory firm, Hunt Partners in partnership with law firms AZB Partners and PwC India.
“The report does indicate that corporate governance in India has still some distance to cover,” Hunt Partners managing partner Sunit Mehra said.
“The regulatory framework has more teeth and better clarity, the advent of the new Companies Act, 2013 calls for Indian corporate governance standards to be at par with the best worldwide,” he added.