Sebi chief finds notion of Independent Directors puzzling

Independent directors have an important role to perform as they are a voice of the minority shareholders and added that in the last two-three years, Sebi has seen a rise in the number of resignations of such people.

“If any such resignation is on account of governance concern, considering the role of, and expectations from, independent directors, I urge the resigning independent directors to come forward and state the same clearly to the public at large,” Tyagi said at an event organised by industry grouping CII.

He also said that the directors are mandated to give reasons for their resignations within seven days and go beyond “cryptic” writing to detail out an exact reason for their move. Tyagi admitted that the independent directors are a “puzzle” which the Sebi is trying to deal with as it attempts to strengthen the overall systems.

India Inc has faced frauds over the last few years and regulators have been making efforts to strengthen the corporate governance standards. “… the whole thing that they (independent directors) are the voice of the minority shareholders, to what extent should they be accountable and responsible, how they fit in into the board structure, which type of people should be taken” are among the issues Sebi is grappling with, Tyagi said.

He believes industry groupings like CII, which is at present headed by banker Uday Kotak who had drafted the code on corporate governance, will play a vital role. The industry bodies have to self-regulate, introspect more and set higher standards on corporate governance.