Referring to the new Bill on company affairs, the Minister said the government was working to simplify the law by bringing down the provisions from 600 to about 400. He further said that there was a need to restrict the number of directorship an individual could hold. “We don’t have superhuman being to be the director of 20-25 companies”.
“Those aspiring for the posts should be aware that it is a position of responsibility and not a joy ride,” he said. (Source: Business Standard (New Delhi Edition) dated 22nd August 2009)
The above issue of "Super (human) Independent Director" was commented upon by me on the blog “Indian Corporate Law” on 30th July 2009. To read the full article click here.
It is also quoted verbatim below.
In view of the above, it is pertinent that, those IDs holding such ornamental posts, on the moral grounds should of their own resign from some of directorship before they are removed through the enactment of new company law and get humiliated later.
It would also be, not out of context to mention here that the Chairmen/ Chairperson / Nomination committees of those corporate should set an example of good corporate governance and ask these IDs, who are holding so many posts on the board to go immediately. Not only, the reputation of these companies is at stake, but it would lead to plummet of these companies' shares in the stock market thereby affecting the minority shareholders values, like in the case of Satyam.
Quote:
Super ( Human) Independent Directors
It is a human nature to be greedy at the expense of others. Some of these "Super (human) Independent Directors”, whose foremost duties toward the minority shareholders are being overlooked for the same reason. The IDs who are on the board of companies as high as around half century (50) will never be independent of mind( one of the main principle of Good Corporate Governance), thus not eligible & qualified to be on the board on behalf of these minor shareholders.
It is now the duty of the regulatory authority to intervene and make suitable amendments in sections 275, 276, 277 & 278 of company act and reduce the number of company an individual ID can hold to ten (10) instead of present fifteen (15). The regulatory authorities should also go a step further to include unlisted / private companies, in the forthcoming Indian Company Bill 2009 to curb gross misuse by some of these greedy Super (human) Independent Directors. Source: http://www.directorsdatabase.com/
Unquote
P R Chandna
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‘One cannot be independent director in more than 5 listed cos’
Indian Express 1st September 2010: http://www.indianexpress.com/news/one-cannot-be-independent-director-in-more-than-5-listed-cos/675701/0
The Standing Committee on Finance has recommended that a person may be an independent director in only five listed companies and 10 public companies. While there is no cap at present, the Ministry of Corporate Affairs (MCA) had proposed that a person may be an independent director in seven listed companies and 15 public companies.
In its report on the Companies Bill, 2009, tabled in Parliament today, the committee suggested that the number of such directors in a company should be capped at 15, excluding the directors nominated by the lending institutions. It has also called for a Code for independent directors that elaborates on their role and responsibilities vis-a-vis other directors, their remuneration and extent of their liability.
P.R.Chandna
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