Friday, February 22, 2013

Importance of Experience

IiAS (Institutional Investor Advisory Services) has advised institutional investors to vote against the special resolution to elect Sudarshan Venu, son of Venu Srinivasan to the Board of TVS Motor Company Ltd. The reason advanced is his lack of experience though it is accepted that he is educationally well qualified. IiAS has done a commendable job in highlighting one's need for experience to qualify as a director.

The company should accept the spirit behind the recommendation of IiAS and withdraw the resolution. It is a test for the company's commitment to principles of corporate governance which necessarily include the grace not to nominate the promoter family member ipso facto to the Board.

Experience is even more necessary to run a nation as its prime minister. Being a member of a particular family does not automatically entitle anyone to become a country's leader. It is strange that standards required to become a company's director are stricter than those for becoming a country's leader.

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