The government has estimated that corporate India will need 3,000-4,000 "independent directors" within the next six months to comply with the Securities and Exchange Board of India's listing requirements. Sebi and the company affairs ministry are yet to reach a consensus on the proportion of independent directors needed on company boards.
"The concept of independent directors is here to stay, whether mandated or otherwise. Even though there are costs attached to it, the value-addition will significantly outstrip costs," YS Malik, joint secretary, company affairs ministry, said at a roundtable on independent directors organised by the Confederation of Indian Industry.
To ensure that corporates are able to find qualified people, the ministry is facilitating the formation of databases of potential "independent directors" through professional bodies and industry chambers.
Malik said 3,000 to 4,000 people were required for about 6,000 companies, and asked various industry bodies to draw up a list of such persons.
Stressing the need for identifying people with integrity, he said an independent director could be on board of five to six companies, but not on board of companies in competing sectors.
While Company Affairs secretary Komal Anand said the databases should be ready by November 15, industry experts felt that they would have to be in place much earlier -- preferably by the next month.
Adi Godrej, chairman of the Godrej group, said, "Many companies have already complied with the Sebi guidelines but there is a need to harmonise the differences between the Sebi Clause 49 and the recommendations of the JJ Irani Committee."
The CII already has about 50 names and is in the process of adding more.
The Institute of Company Secretaries of India and the Institute of Chartered Accountants of India are also working on their lists besides other industry chambers like Ficci and the PHD chamber of Commerce.
Jitesh Khosla, joint secretary in the company affairs ministry, said the definition of "independent director" as per the recommendations of the JJ Irani Committee would give a clear direction vis-à-vis accountability and liability of independent directors.
