Lead Independent Director

One of the primary objectives of the Board is to perform its fiduciary duty to shareholders. In a publicly-listed company, the Board needs to be as independent as possible. Independence cannot merely be judged by the numbers of independent directors (IDs) on the Board but by the amount of contribution and active participation of each of the IDs. Indian companies are largely promoter driven who occupy a number of Board positions and have a great influence on Board decisions. Every shareholder, promoters included, is normally inclined in safeguarding its interests. This may lead to situations where the majority investor guides the Board to vote in favour of decisions which benefit the former more than other investors. This is a risk that can be mitigated by having a strong independent directors that are capable of voicing concerns when required. It also helps if the Chair of the Board is an Independent Director.

The full article can be read at: Lead Independent Director