75 percent of independent directors are relatives of promoters
By siliconindia   |   Thursday, 21 May 2009, 00:11 IST   |    2 Comments
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75 percent of independent directors are relatives of promoters
New Delhi: The credibility of the corporate governance in the hands of the independent directors cannot be determined, as majority of the independent directors are relatives of the promoter or the company heads. "Nearly 75 percent of all independent directors are 'home' members who are natural allies of the promoters and are not independent in any sense," said a study. The study, which was conducted by the research firm Prime Database in collaboration with Bombay Stock Exchange (BSE), scanned the profiles of independent directors on the boards of 2,244 companies listed on the BSE. As per Clause 49 of the listing agreement, 50 per cent of the directors on boards of listed firms should be independent directors. The inclusion of the relatives, friends and neighbors, who may qualify as independent directors, ultimately imply failure to function independently due to their close connections with the board. The women representation, however, takes a beating with only 2.5 percent of the total 6,443 functionaries being women. "Women in India have made rapid strides in almost all walks of life, and have not only excelled but also demonstrated a higher degree of governance. But not when it comes to directorship position," the study said.

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