SEBI To Improve Corporate Governance By Building Capacity For Independent Directors

Amid the debate on corporate governance following the resignation of HDFC Bank ’s part-time chairman and independent director Atanu Chakraborty in the past month, SEBI Chairman Tuhin Kanta Pandey announced on Monday that the market regulator is working with various stakeholders for capacity building of independent directors at scale. “Independent directors are there not only for compliance and pointing fingers at management but for also supporting and finding solutions through accountability. They need to bear this responsibility in mind,” he said speaking at the 19 th CII Corporate Governance Summit. He added that capacity building cannot be mandated in a prescriptive manner. But it can certainly be encouraged, enabled and supported through collaboration between various such as industry bodies, professional bodies and academic/business institutions. The move is aimed at improving corporate governance. He described the evolving landscape of corporate governance as a challenge and said it is unrealistic for every independent director to have perspective across disciplines including technology, data governance, complex financial structures and regulatory developments. The new initiative will aim to create meaningful difference in the role of independent directors by focusing on multiple areas using a continuous, structured and collaborative approach to learn. This will include understanding of the business model and operational risks, peer-based learning where independent directors learn from each other’s experiences, learning on emerging areas like technology governance, sustainability and behavioural risks and creating repositories of best practices, case studies and evolving regulatory expectations. While acknowledging the steps taken to improve corporate governance in the past, he said that the industry needs to focus on the internalisation of the governance frameworks and their implementation and asked the industry to strengthen the quality of engagement within various levels of the current framework. He also emphasised on the importance of independent directors in protecting the interest of the minority shareholders.