Securities and Exchange Board chairman Tuhin Kanta Pandey has once again underlined the role of independent directors in effective decision-making and their responsibility towards protecting interests of minority shareholders.
“Independent directors are accountable for decisions, often without full operational visibility. This makes their role both critical and complex, which is why the conversation must now move beyond who sits on the board to how effectively they are able to contribute once they are there,” Pandey said at a CII event on corporate governance here on Monday.
Pandey's comments on critical role of independent directors come against the backdrop of the resignation of HDFC Bank's part-time chairman Atanu Chakraborty last month. In his resignation, Chakraborty had cited certain happenings and practices within the bank that he had observed over last two years, were not in congruence with his personal values and ethics. But he did not elaborate on the issues despite repeated requests by the board members.
In the aftermath of the event, Pandey had urged independent directors to be more responsible.
While he refused to comment on individual companies, Pandey said independent directors have an important responsibility of overseeing compliance, risk management, financials and if the management have to say something, the board should discuss those things.
“Independent directors are there not only for compliance and pointing fingers at the management, but also for supporting and finding solutions to accountability,” he added.
“It is a constructive approach,” noted Pandey, stating that shareholders of any company or other stakeholders do get affected by the performance and the ups and downs in market cap.
“Independent directors in many ways stand for interests of the minority shareholders, that the value of the company keeps growing, consistent with laws and regulations," he said earlier in his address.