INSUBCONTINENT EXCLUSIVE:
ET Intelligence Group: When a clutch of foreign investors recently voted against the reappointment of Deepak Parekh, one of the senior-most
including Parekh and his team, were stunned, even outraged
grapple with a similar predicament as Parekh
Harsh Mariwala (similar to Parekh) is non-executive chairman of Marico and Kaya (both group
companies), and is on the boards of LT Finance Holdings, Zensar Technologies, Aster DM Healthcare, JSW Steel and Thermax
In contrast, Birla is director only on the boards of his group companies.
While Birla declined to respond to queries from ET, Mariwala spelt
may pose challenges to a director in allocating sufficient time to the companies, thus hindering his ability to play an effective role
In light of which the Kotak Committee on corporate governance recommended a limit of seven listed companies for a director to hold positions
in and the same has been enforced by Sebi through its recent amendments to the listing regulations
While global views on this differ as they treat a director having more than 5 public directorships as overboarded versus 7 public
directorships which is the limit in India, investors need to give due regard to some of the factors like the capability of the individual
serving the board, his contribution to the company, the needs of the board on which he serves and the depth and quality of executive
Marico.
According to him, the law in India has already put many checks and balances in place to ensure that each director fulfils his
fiduciary responsibility.
Birla and Mariwala each serve on boards of nine and seven publicly-listed companies, respectively
FPI holding in companies such as Idea Cellular, Grasim Industries, Ultratech Cement, Hindalco and Marico is more than 20%.
ISS, the global
be concerned whether directors are able to fulfil their fiduciary responsibilities when they are serving on a large number of boards, as in
While the demands of each board will vary, and the capacity of each person will vary, holding the equivalent of more than six directorships
None of the chairmen of companies from the SP 100 and FTSE 100 indices serve on more than four and six listed companies, respectively.
These
evaluation, recommendation of re-appointment based on the outcome of evaluation, succession planning, provisions on disqualification of
has to evaluate the ends and means of a board before deciding if a person can be boarded or not to be boarded, else, it may go on to deprive
this to strengthen their disclosures as regards to matters like appointment or re-appointment of directors for investors as well as proxy
advisory firms to take pragmatic views on such matters.
While the global norms consider more than six companies to be over-boarding, the
Sebi regulations notified in May this year have a slightly higher threshold for individuals having board memberships in listed firms.
The
newly notified Sebi (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018 limits the number of directorship of a
person to eight listed entities with effect from April 1, 2019 and not more than seven listed entities with effect from April 1, 2020.
