Kiran Mazumdar Shaw of Biocon happens to be an 'independent director' in Infosys Ltd. It is obvious that she is not lured by money in accepting this position. In other words, prospects of hefty director fees cannot influence her. Does this ipso facto mean that she is really independent as a director?
She is an admirer of Narayanamurthy's talents and acumen. That is why she accepted the directorship. Her admiration for NRN vicariously translates into admiration for NRN'S son and protege, Rohan Murty. It was not surprising therefore that she could not resist the temptation to praise the latter at the least opportunity.
This is what led her to tweet an enthusiastic approval for Rohan Murty's "brilliant tech-loaded presentation" in a board meeting of Infosys.
Contrary to what the media claims, this perhaps is not a serious breach of corporate governance principles. After all, Shaw did not tweet the contents of presentation. But this interesting episode raises another important issue: How independent are independent directors? Is it really possible for someone chosen by a company's promoters to think unlike the promoters which quality is a prerequisite for true independence?
Updated on 28th April: Sundaram Finance Limited, a stickler for compliance with regulations, made the following announcement on 25th April.
"Sundaram Finance Ltd has informed BSE that Based on the declaration under Section 149 (7) of the Companies Act, 2013 submitted by Sri S Ravindran, Independent Director, informing that some of the criteria of independence as provided in Section 149 (6) of the Companies Act, 2013 are not being met in his case, the Board of Directors at their meeting held on April 25, 2014, decided to treat him as Non-Independent Director with immediate effect."
Companies feel that a director is a director, independent or otherwise. They do not seem to derive any additional benefit from an independent director. Nor do shareholders. Why should we persist with the myth?
She is an admirer of Narayanamurthy's talents and acumen. That is why she accepted the directorship. Her admiration for NRN vicariously translates into admiration for NRN'S son and protege, Rohan Murty. It was not surprising therefore that she could not resist the temptation to praise the latter at the least opportunity.
This is what led her to tweet an enthusiastic approval for Rohan Murty's "brilliant tech-loaded presentation" in a board meeting of Infosys.
Contrary to what the media claims, this perhaps is not a serious breach of corporate governance principles. After all, Shaw did not tweet the contents of presentation. But this interesting episode raises another important issue: How independent are independent directors? Is it really possible for someone chosen by a company's promoters to think unlike the promoters which quality is a prerequisite for true independence?
Updated on 28th April: Sundaram Finance Limited, a stickler for compliance with regulations, made the following announcement on 25th April.
"Sundaram Finance Ltd has informed BSE that Based on the declaration under Section 149 (7) of the Companies Act, 2013 submitted by Sri S Ravindran, Independent Director, informing that some of the criteria of independence as provided in Section 149 (6) of the Companies Act, 2013 are not being met in his case, the Board of Directors at their meeting held on April 25, 2014, decided to treat him as Non-Independent Director with immediate effect."
Companies feel that a director is a director, independent or otherwise. They do not seem to derive any additional benefit from an independent director. Nor do shareholders. Why should we persist with the myth?
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