JOIN USAs many as 1,287 independent directors of companies listed on the National Stock Exchange (NSE) have served on the boards of their respective firms for 10 years or more, as against the recent changes made by the Securities and Exchange Board of India (Sebi) mandating that no person can serve for more than 10 years.
The 10-year rule would have affected one out of every five directorship positions across 660 NSE-listed companies, according to a press release from indianboards.com, which maintains data on the composition of Indian boardrooms, created as an initiative jointly by Prime Database and the NSE.
However, the Companies Act implements the 10-year limit only after the new rules are put in place which means that these directors get another ten years to serve on their current positions.
Market regulator Sebi has cut this shorter for listed companies, having mandated that those have already served five years can only serve another five.
Pranav Haldea, Managing Director of Prime Database said in a statement issued on Tuesday that a more immediate implementation would have better served the purpose of corporate governance.
“While a fixed term for independent directors is favourable for renewing boards, it would have served a better purpose in case both the Companies Act and market regulator Sebi would have made this provision applicable immediately, with, of course, a compliance leeway of one year,” he said.
He added, “Effectively, no new independent director faces are likely to be seen at least for the next 5 years as a result of this provision.”
It may be noted that the longest serving independent director is Klaus Carl Uebel.
He has been on the board of Hercules Hoists for 51 years, and can now serve for another five years.