SEBI chief admits Independent Directors' issue not yet resolved

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SME Times News Bureau | 07 Apr, 2021
Yet again raising concerns regarding the lack of independence of Independent Directors and the need for getting in the best people for the job, the chief of India's capital market regulator on Tuesday admitted that despite their efforts, no ideal solution has come up in the matter.

In his address at the 14th CII Corporate Governance Summit, Securities and Exchange Board of India (SEBI) Chairman, Ajay Tyagi said that as a part of their continuous efforts in this direction, they recently came out with a consultation paper touching some of these issues.

"I must admit that notwithstanding various efforts made in the past, we are yet to get ideal solutions to issues such as 'ensuring independence of Independent Directors', 'selecting the best suited persons as Independent Directors', 'making their role more effective and meaningful', etc," he said.

The concerns gained prominence after the IL&FS crisis which involved governance misconduct by several Independent Directors. Concerns were also raised after Independent Directors in several companies resigned.

In such an instance, several Independent Directors of Yes Bank, under its previous management, had quit the bank's board through a series of resignations.

Tyagi on Tuesday noted that some articles have opined that there is a tendency to portray the promoters in a bad light and that there is too much focus on only one set of stakeholders, the minority shareholders.

"I would like to clarify that we, at SEBI, acknowledge the very important role played by the promoters and entrepreneurs in wealth creation," he said.

He also mentioned a number of steps to improve the ease of compliance by the promoters and said that SEBI has reviewed the regulatory framework for re-classification of promoter or promoter group and have eased several requirements such as giving exemption from the requirement of shareholder approval in cases where the shareholding of promoter seeking re-classification is less than 1 per cent or when re-classification of promoter is pursuant to an open offer under the takeover regulations.

SEBI has also revamped the entire rights issue process to make fund raising through this route easier, faster and more cost effective, he added.

"To facilitate easier fund raising, we have reviewed the framework of the Innovators Growth Platform, to make the platform more accessible to the start-ups and new age entrepreneurs," SEBI said.