It is desirable that only companies of a certain size should be required to have the full complement of independent directors as the pool of independent directors available for the corporate sector in India is not large. Today the overarching influence of the promoter or the main shareholders of the company in the selection of the independent directors denudes the whole process of legitimacy. Unless a well thought out transparent process of selecting and appointing independent directors is put in place, the institution of independent directors will soon become a big farce with the small number of good independent directors also leaving the field, disillusioned with the lack of credibility in the whole system. It is true that independent directors in corporate India are by and large renowned retirees living in the past and carrying on with the present.
This would soon change if companies were to seek out the best of independent directors, as a business need. Independent directors endowed with a rich mind and an independent disposition can bring out a much-needed transformation in boardrooms — board meetings can become very effective strategy sessions rather than a meeting where form supersedes substance.
Corporate India is at a strategic inflexion point in this regard. Future competition is going to be based not only on hard factors of business but mainly on soft factors such as corporate credibility and governance standards. That is where the independent directors come in. Corporate India would do well to adopt a stiffer prescription on independent directors as a wise preparation for a challenging but a rewarding future.
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