Speakers included experts from the Bombay Stock Exchange, Stakeholders Empowerment Services and Institute of Chartered Accountants of India as well as IIMB faculty
17 March, 2023, Bengaluru: The Centre for Corporate Governance and Citizenship (CCGC) at IIM Bangalore hosted an online panel discussion on ‘Ways for the Future: Board Independence – Insider Influence and Vested Interests’, on 28th February 2023 (Tuesday).
Insider influences can vary depending on the nature of the company. For widely held companies, the vested interests of the executive management often take the form of high pay for limited performance. In controlled companies, vested interests may be the controlling owners themselves in terms of entrenchment and self-dealing. Are Independent Directors equipped to challenge these insiders? Or is that possibly asking for a bit too much? These were few of the issues discussed during the session.
The speakers of the online session were Sundararaman Ramamurthy, Managing Director & CEO, Bombay Stock Exchange; J N Gupta, Managing Director, Stakeholders Empowerment Services, and Dr. Ashok Haldia, Past Secretary, Institute of Chartered Accountants of India.
The session was chaired and moderated by Prof. Padmini Srinivasan, Chairperson, Centre for Corporate Governance and Citizenship, and faculty of the Finance & Accounting area, IIM Bangalore. She set the context of the discussion saying that Independent Directors (IDs), at this current day and age, have the huge task of facing challenges of conflict of interest, exercising their independence in taking decisions, tackling issues of dominant versus minority and other shareholders, etc. “Are the Independent Directors adequately equipped, always, to face these challenges?”, she put a question to the audience.
Dr. Ashok Haldia remarked that the most important thing for the Board is to generate trust among different stakeholders. “It comes through the quality of its performance as well as the independence it enjoys and displays. Due diligence must be taken by the Board in appointing Independent Directors, on their ability to act fairly and objectively. Some of the Independent Directors do not act fairly and boldly in the decision-making process; the Board takes due or undue advantage of the situation.”
Sundararaman Ramamurthy was of the opinion that the process of appointment of Independent Directors naturally defines how independent they are. “It is important for Independent Directors to have three qualities – independence to act fairly and without any fear; domain knowledge, and the expertise to understand and articulate well during the Board proceedings. The quality of the information provided to the Board is important to take quick decisions.” He added that while Board independence and vested interests are real issues in many places, fortunately for market intermediaries, the umbrella of the regulatory framework in India provides a great amount of protection. “The amount of respect and dependence on Independent Directors for fair and transparent transactions offers the incentive that any organization can give to IDs.”
J N Gupta, Managing Director, Stakeholders Empowerment Services, shared his perspective on the selection process, quality and the role of Independent Directors in the Board. “Independence is a character of acting without fear. Independent Directors are to be selected from a known group and should follow strict ethical practices. IDs must display professionalism and a clear conscience while navigating situations in decision-making. Continuous learning, updating own knowledge and the ability to debate issues effectively are the main skillsets required for IDs.”
The session was followed by a Q&A session through chat.
In conclusion, panelists were of the view that although a lot of changes are indeed happening in the area of Corporate Governance, a lot more still needs to be done. More workshops and sessions like the one held by CCGC would serve this purpose better, they opined.
Watch here: https://youtu.be/L3t6HTLDhBE
Speakers included experts from the Bombay Stock Exchange, Stakeholders Empowerment Services and Institute of Chartered Accountants of India as well as IIMB faculty
17 March, 2023, Bengaluru: The Centre for Corporate Governance and Citizenship (CCGC) at IIM Bangalore hosted an online panel discussion on ‘Ways for the Future: Board Independence – Insider Influence and Vested Interests’, on 28th February 2023 (Tuesday).
Insider influences can vary depending on the nature of the company. For widely held companies, the vested interests of the executive management often take the form of high pay for limited performance. In controlled companies, vested interests may be the controlling owners themselves in terms of entrenchment and self-dealing. Are Independent Directors equipped to challenge these insiders? Or is that possibly asking for a bit too much? These were few of the issues discussed during the session.
The speakers of the online session were Sundararaman Ramamurthy, Managing Director & CEO, Bombay Stock Exchange; J N Gupta, Managing Director, Stakeholders Empowerment Services, and Dr. Ashok Haldia, Past Secretary, Institute of Chartered Accountants of India.
The session was chaired and moderated by Prof. Padmini Srinivasan, Chairperson, Centre for Corporate Governance and Citizenship, and faculty of the Finance & Accounting area, IIM Bangalore. She set the context of the discussion saying that Independent Directors (IDs), at this current day and age, have the huge task of facing challenges of conflict of interest, exercising their independence in taking decisions, tackling issues of dominant versus minority and other shareholders, etc. “Are the Independent Directors adequately equipped, always, to face these challenges?”, she put a question to the audience.
Dr. Ashok Haldia remarked that the most important thing for the Board is to generate trust among different stakeholders. “It comes through the quality of its performance as well as the independence it enjoys and displays. Due diligence must be taken by the Board in appointing Independent Directors, on their ability to act fairly and objectively. Some of the Independent Directors do not act fairly and boldly in the decision-making process; the Board takes due or undue advantage of the situation.”
Sundararaman Ramamurthy was of the opinion that the process of appointment of Independent Directors naturally defines how independent they are. “It is important for Independent Directors to have three qualities – independence to act fairly and without any fear; domain knowledge, and the expertise to understand and articulate well during the Board proceedings. The quality of the information provided to the Board is important to take quick decisions.” He added that while Board independence and vested interests are real issues in many places, fortunately for market intermediaries, the umbrella of the regulatory framework in India provides a great amount of protection. “The amount of respect and dependence on Independent Directors for fair and transparent transactions offers the incentive that any organization can give to IDs.”
J N Gupta, Managing Director, Stakeholders Empowerment Services, shared his perspective on the selection process, quality and the role of Independent Directors in the Board. “Independence is a character of acting without fear. Independent Directors are to be selected from a known group and should follow strict ethical practices. IDs must display professionalism and a clear conscience while navigating situations in decision-making. Continuous learning, updating own knowledge and the ability to debate issues effectively are the main skillsets required for IDs.”
The session was followed by a Q&A session through chat.
In conclusion, panelists were of the view that although a lot of changes are indeed happening in the area of Corporate Governance, a lot more still needs to be done. More workshops and sessions like the one held by CCGC would serve this purpose better, they opined.
Watch here: https://youtu.be/L3t6HTLDhBE