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Painting a dismal picture of corporate governance practices in listed companies in India, a study has found that a select few persons serve as independent directors on a lot many boards and many of them have been holding these positions for years together.
Besides, the performance of Indian companies has been found to be disappointing on parameters like attendance of directors at board meetings and composition of the boards.
As per the study, conducted by proxy advisory firm InGovern for corporate governance structure at the country's top 100 companies as on March 31, 2013, at least 10 independent directors have served for a tenure of 20 years or more on company boards, while 10 others hold such positions on boards of ten or more companies.
Giving details, the 22-page report said that Mahindra group Patriarch Keshub Mahindra served for 36 years on the board of mortgage giant HDFC as an Independent Director.
J K Setna had a 35-year tenure on Colgate Palmolive's board and Nusli Wadia with 34-year stint on Tata Steel.
Besides, C M Maniar has a tenure of 31-year on Hindalco Industries' board, R A Shah and H R Manchanda have 30 years each on the board of Colgate Palmolive and Cipla respectively.
The InGovern research report said that the average tenure of Independent Directors at the top 100 companies is about seven years.
The report said that 21 companies had average tenure of of more than nine years and there were 23 companies where more than half of the Independent Directors have served on the board for over nine years.
It further said that Indian companies have a long way to go before adhering to corporate governance best practices, as their performance is below-par on many parameters like board composition, rotation of auditors and attendance of directors among others.
The Companies Act, 2013 limits the tenure of Independent Directors to hold office up to two consecutive terms, each term of upto five years. They would be eligible for appointment only after a cooling period of three years.
"... Even top companies are not treating corporate governance practices in the right spirit. Institutional investors and regulators should demand better practices from promoters and company management.
"The new Companies Act and initiatives from Sebi to improve corporte governance are steps in the right direction," InGovern's Founder and MD Shriram Subramanian said.
Among other Independent Directors who served more than two decades on company's board are: M L Bhakta has a