Most Independent Directors of Listed Companies are First-timers
As per a recent article published in Economic Times based on the data sourced from Prime Database, at least 64% of Independent Directors on the Board of 2,453 Companies listed on NSE are first-timers. Most of first-timers are being appointed by mid and small-sized companies. The recent ‘board-refresh’ trend running due to completion of 10 years of the Companies Act, 2013 which allows maximum 10 years (continuous) term for Independent Directors, hence those who have completed 10 years have to move out. This trend has contributed most for opportunity for first-timers.
However, it is interesting to note that some companies moving for IPOs who have appointed first-timer Independent Directors, have indicated such directors as a risk factor in the red-herring prospectus.
Industry experts are advocating for mix of experienced and inexperienced independent board members.
