It has finally happened. The turn of the year has brought in the new Clause 49 into the standard listing agreement binding stock exchanges and listed companies.
This signals the onset of the corporate governance code, which among other matters, regulates the composition of the board of directors.
At least half the board has to comprise non-executive directors. But if the board has an executive director as chairman, at least half the board has to comprise “independent directors”. Should the chairman be a non-executive director, one-third of the board ought to comprise “independent directors”.
Corporate India is scurrying for cover. Internet portals have gone out in the past several weeks enlisting professionals to act as independent directors for companies to choose from. Corporate boards are taking a hard look at who should sit on the board.
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