India's corporate governance framework is set for a shift in focus, with SEBI Chairman Tuhin Kanta Pandey calling for stronger engagement and capability among independent directors.
Speaking at the CII Corporate Governance Summit, Pandey said the “next phase of governance” must move beyond structural compliance to improving the quality of boardroom engagement. He emphasised that the conversation should evolve from who occupies board positions to how effectively directors contribute to decision-making.
Highlighting the critical role of independent directors, Pandey noted that capacity building will be a key priority going forward. He indicated that SEBI is planning a large-scale initiative aimed at strengthening the skills and effectiveness of independent directors, in collaboration with industry bodies.
The regulator also stressed the need to transition from a system of periodic reviews to continuous oversight, suggesting that ongoing evaluation mechanisms are essential to ensure robust governance practices.
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This comes just two weeks after Pandey said independent directors are expected to act responsibly and not make any insinuations. This was in response to the executive chairman leaving HDFC Bank, citing concerns on ethics and values, Pandey reminded of the responsibilities of independent directors like Chakraborty. It can be noted that the resignation had led to a sharp correction in the largest private sector lenders scrip, as investors became concerned.
The independent directors are required to be protectors of the interests of minority shareholders and should act "responsibly", Pandey told reporters. "No one is expected to make insinuations without proper evidence and recordings," Pandey told reporters in the customary post-board meet interaction.
Reading out from statutes, he said there is a system in place to deal with independent directors' concerns, which includes the concerns being addressed to the board and minuted as well. "We can't keep things vague," he added. SEBI will be investigating all the aspects of the matter and look to bring out all the facts, he said, stressing that independent directors hold important positions.
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