Sebi calls for more power to independent directors

Mumbai: Stressing the need to strengthen the powers of independent directors, Sebi today said they are in the best position to safeguard the interest of minority shareholders.

“An independent director is in a position to exercise unbiased judgement on issues which may be related to competing interests, on issues where the interest of the management or promoters is coming in the way of minority shareholders. Here, an independent director is best placed to take a call,” Sebi whole-time member Rajeev Kumar Agarwal said.[caption id=“attachment_321589” align=“alignleft” width=“380” caption=“Wanting more power for independent directors. Image courtesy Sebi”]  [/caption]

Addressing a seminar on the role of independent directors in promoting corporate governance, Agarwal said an independent director is duty bound to watch the interests of the company as a whole and not just in silos.

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Stating the corporates cannot be managed properly unless the board is independent, he said the independence of the board is the most crucial factor.

“His role is particularly important in the areas of remunerations and the related party transactions. I am not saying that the related party transactions per se are questionable, may be most of the transactions are in the interest of the company, but still this is an area which may lead to conflict of interest,” he said.

Therefore, independent directors have to exercise special care while looking into the third party transactions, he said, adding, “it is not necessary that the interest of the company and the interest of the minority shareholders are at a divergence.”

Addressing the seminar, NSE joint managing director Chitra Ramakrishna said, “Independent directors carry important responsibilities toward all the stakeholders, particularly towards minority shareholders.”

PTI