Issues of Independence of Board of Directors in India

Abstract

In companies, the board of directors acts as one of the most important governance mechanisms in aligning the interests of the managers and the owners/shareholders of the company. We analyzed 241 NSE listed companies to understand the level of independence of the board of directors.  We observed that although many companies have minimum one third members as an independent member, there are companies who have less than one third independent members on the board. India has proactively implemented corporate governance norms and guidelines; however the bigger challenge lies in the effective implementation and enforcement of these rules. The certainty of punishment in case of non-compliance would go a long way in augmenting disclosures, thereby improving the corporate governance   standard in the country.