Post Satyam, there has been a lot of debates, discussions on “Are Independent Directors effective”? Everyone has had something to say about this.

YES! there are some reputed people who have been extremely effective over the years, however the general perception has been to the contrary. There are numerous reasons for this, common which I personally feel are listed below:

1)     A fair number of them have full time responsibilities and are also on several boards, which makes it difficult to do   justice to all of them in the right manner.

2)     They have little on stake in the company on whose board they sit.

3)     Mostly, they are friends of the promoter, other board members.

4)     Little experience in the industry of the company on whose board they are on.

Whilst these are factors that can be overcome, only specific guidelines, laws would ensure this really happens. As also the internal need of wanting this to happen shall play an important role.

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