Independent Directors, Key to Good Governance
Published: 2013
Author(s) Name: Nailesh Rameshbhai Limbasiya |
Author(s) Affiliation: R. K. University, Rajkot, India
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Abstract
The collapse of high profile large corporations such as Satyam, Enron etc. while performing the governance practices has
raised many issues regarding good governance mechanism. The independent directors are one of the important mechanisms for the good
governance practices in an organisation. In India two-third of the companies are family owned and therefore presence of independent directors
on the board is very important to protect the rights of minority investors and other stakeholders. Independent directors with independent
thoughts and action may lead to a constructive value addition for the firm. The present paper discusses the importance of independent directors
on the board. The paper also shows a glimpse of the current picture of corporate structure and corporate governance in India. Though the role
of independent director is most important to detect and prevent the unethical practices still it fails to perform their roles in many cases. This
paper identifies and explains the drivers on reasons, why independent directors still fail to perform their fiduciary roles in many cases. Finally
the article concludes based on the functioning of the independent directors and challenges for having an implementable code of conduct for
them. The diverse opinion of the corporate experts, government bodies, and industry apex bodies is the need of the hour to make one that is
easy to implement.
Keywords: Independent Directors, Corporate- Governance, Stake Holders
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