Tuhin Kanta Pandey, chairman,Sebi
In the comments that came weeks after the resignation of Atanu Chakraborty, an independent director and part-time chairman of HDFC Bank, Pandey said the role of such directors is far more than just compliance, and also encompasses functions like assessing the information and insights from the management, governance, risk management and also financials.
Mumbai: Sebi chairman Tuhin Kanta Pandey on Monday said independent directors discharge a very important responsibility in a company’s affairs, and underlined the need for them to adopt a “constructive approach” in discharging their duties.
In the comments that came weeks after the resignation of Atanu Chakraborty, an independent director and part-time chairman of HDFC Bank, Pandey said the role of such directors is far more than just compliance, and also encompasses functions like assessing the information and insights from the management, governance, risk management and also financials.
“There is a need to discuss on such matters at the board. But a constructive approach (is needed). Shareholders and other stakeholders of a company are influenced by a company’s performance and market cap,” Pandey told reporters, answering a specific question on investor wealth erosion at HDFC Bank following Chakraborty’s resignation.
Chakraborty’s surprise resignation, citing incongruity in values and ethics, caused a sharp correction in the HDFC Bank scrip and eroded investor wealth.
Earlier, speaking at a corporate governance event organized by CII here, Pandey said independence itself is not the “end objective” for independent directors, but it is a starting point.
“Independent directors are there not only for compliance and pointing fingers at management, but also to support and find solutions through accountability. They need to bear this responsibility in mind,” he said.
The career bureaucrat-turned-regulator said there is a need for capacity building among independent directors, and announced an initiative to work towards the goal jointly with other stakeholders.
Pandey said capacity building cannot be mandated in a prescriptive manner but needs to be encouraged, enabled and supported through collaboration between “regulators, industry bodies, professional bodies and academic business institutions.
“SEBI will seek to embark on a joint initiative for capacity building of independent directors at scale with a view to further improve corporate governance,” he said.