India Inc braces for major boardroom shake-up
As the mandated rotation of Independent Directors under the Companies Act, 2013 is approaching, Indian promoters, CEOs, headhunters, private equity firms owning multiple companies, and Big Four firms are actively scouting or promoting candidates who will be the right fit to replace outgoing directors and also safeguard their own interests within the company boards when necessary.
As per a prominent market watcher, 1551 independent directors in 825 (out of total 2123) companies listed on NSE shall complete (minimum) a 10-year tenure by 1st April 2024.
Although there might be a significant number of director changes overall, individual companies are expected to handle only a few departures, typically ranging from 1 to 3 directors. According to experts, this transition is expected to usher in a younger generation and infuse new viewpoints into boardroom discussions.
In India, corporate founders commonly rely on family, friends, and extended social networks to carefully select people for their boards, and they have recently been making calls to well-known board members who are slated to depart from a few boards next year. However, popular board members are being cautious in their selections this time around.
The risk-reward ratio is often skewed for independent directors because they shoulder significant legal and reputational risks while receiving relatively modest compensation or rewards in comparison to their responsibilities.
