TagIndependent Directors

Minimizing the Liability of Directors: SEBI’s Order in the Zylog Case

[Guest post by Amitabh Robin Singh, who is a corporate lawyer practising in Mumbai] Liability of directors is a sensitive topic in India, particularly for foreign investors who propose to nominate directors to the boards of their Indian investee companies. That is why clauses are inserted in shareholders’ agreements to the effect that the investor’s nominee director will not be identified...

Shareholder Primacy in India: So Near and Yet So Far!

[The following guest post is contributed by Professor Bala N. Balasubramanian, who is an Adjunct Professor at the Indian Institute of Management, Ahmedabad.][1] The scholarly debate on primacy among the shareholders, boards and the executive in corporate governance is intellectually as challenging as it is yet inconclusive, although more recent trends around the world would seem to suggest at...

Delaware Supreme Court on Board Independence

Issues of board independence, and particularly the position and role of independent directors, have resurfaced to the fore in India in recent months. Given this scenario, it may be useful to consider developments relating to board independence occurring elsewhere. Here, a ruling last month from the Delaware Supreme Court on the determination of board independence would be of interest. In Thomas...

Et tu Tata!

[The following guest post is contributed by Professor Bala N. Balasubramanian, who is an Adjunct Professor at the Indian Institute of Management, Ahmedabad] Recent developments at the Tata Group in general and Tata Sons particularly have shaken corporate India in terms of standards of good governance in companies. The group had meticulously built a reputation over the years for ethical and...

Appointment and Removal of Independent Directors: Need for Reform?

The removal this week by three Tata group companies of Mr. Nusli Wadia as an independent director from each of them has reinvigorated some of the debate surrounding board independence from a conceptual standpoint. This has provided critics of board independence with more fodder. In the past, there was anecdotal evidence that whenever there were disagreements between managements or promoters on...

Tata Group Companies: “Long-Term Interests” the Key Touchstone

The episode surrounding the Tata Group has taken further twists and turns. After several Tata Group companies expressed their support in favour of Mr. Mistry, who continues to be chairman of several of those companies, one company – Tata Global Beverages – adopted a different stance. In a board meeting held this week, the directors of Tata Global Beverages decided by a 7:3 majority to replace Mr...

The Tata Episode: Corporate Governance and the Continuing Influence of Promoters

It is generally understood that corporate governance norms ought to address agency problems between various actors in a company. Moreover, in companies with concentrated shareholding, the agency problems between controlling shareholders (referred to in India as “promoters”) and minority shareholders tend to be rampant, and hence corporate governance measures need to be targeted to address that...

Management Conflicts and Board Independence

In the ongoing saga involving the boardroom battle for the Tata Group, a new development may have significant implications for corporate governance practice in India. Yesterday, a Tata Group company, The Indian Hotels Company Limited (IHCL) notified the stock exchanges of a meeting held among the independent directors of the company. It stated: Taking into account Board assessments and...

Briefing on Board Independence

The new edition of the NSE Quarterly briefing is on “Issues in Board and Director Independence” and is drafted by Professor “Bala” N. Balasubramanian. The executive summary is as follows: – Worldwide, corporate governance best practices and regulations recognise the need for boards and directors to be independent and objective. – In a country such as India, where concentrated...

Independent Directors in Private Debt-Listed Companies

[The following guest post is contributed by Niddhi Parmar of Vinod Kothari & Co.] Earlier under Companies Act, 1956 (section 2(23A)) the term “listed public companies” was in a manner that clearly excluded private companies. Consequently, listed private companies were exempt from certain provisions that were exclusively applicable to listed public companies. However, the Companies Act, 2013...

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