Focus on quality over quantity in the search for independent directors
The appointment of Independent Directors is amongst the most consequential decisions that a company makes. As hundreds of Independent Directors are set to mandatorily retire in 2024, the search for qualified and experienced professional Independent Director has increased sharply. This reflects the increasing importance placed on good governance and the need for experienced professionals to guide companies in their decision-making processes. Despite having world’s biggest population, searching suitable candidates for this niche and specialized role of Independent Director is a daunting task.
Apart from the legislative requirements, there are numerous advantages of having independent directors on the board of directors, which range from and are associated with the long-term success of an organization, to the strengthening of the internal control environment. Independent directors, with their own skill sets and experiences, can help counterbalance potential management weaknesses. In a country like India, where several corporations are family-run businesses, the post of Independent Director has historically been filled by someone who is related to the Promoter or Chairman. However, with the increasing focus on global expansion and the need for expert guidance, there has been a pragmatic shift toward hiring qualified and capable Independent Directors.
