I had written about Why independent directors are ineffective? here sometime in May 2009.

Some time ago I read about Relics in Board rooms, where the types were categorized by a Prime Database study that classified in 4 broad types

75% Home directors – known personally to promoters – relatives, friends. Several loopholes exist in the Companies Act allowing their induction.

15% Value directors – people that either bring knowledge and expertise to the company – lawyers, technocrats etc. or provide it with a strong network.

5% Celebrity directors – inducted to add an aura of respectability & news value to the company including film stars, sportsmen etc.

5% PSU directors – typically appointed by political high command or ministers concerned, most are either politicians or bureaucrats.

So finally except 10-15% do Independent Directors really add value? And why does the Companies Act not get modified? Everyone I spoke to really had no answer.

Share:
Written by AD
ex waiter, angadia, travel agent, dotcomer, dukaandaar, marketeer, people watcher. appreciates single malt, food, friends