Recently, the government-run Indian Institute of Corporate Affairs (IICA) held a discussion with a group of leading executives search firms to strengthen the boards of Indian companies. The key point of the discussion was to give companies and headhunting firms free access to the IICA’s databank for independent directors. But when FE spoke to the executive search firms, a majority of them said that they don’t use the data bank currently if they have to search for independent directors for their client companies.
“We don’t use IICA’s database. We handpick people based on the client’s specifications. We have our own network of CXOs who we tap when there’s a need to appoint an independent director. I don’t need database but it can be a good supplement for companies and search firms,” said head of a firm who was part of the discussion, on condition of anonymity.
Another executive search firm head said that his firm has not been using the data bank because it’s not being updated in real time. “We have been using our own headhunting network to search for independent directors just as we search professionals for other roles. If the databank can provide qualitatively better information, it can be useful,” said Ronesh Puri, managing director at Executive Access.
Launched in 2019, IICA’s independent director databank is a comprehensive repository of both existing independent directors as well as individuals eligible and willing to be appointed as independent directors. To become an independent director, a person has to register with this databank in addition to clearing an online proficiency self-assessment test. The databank has about 22,000 directors including 6,000 plus women directors, as per IICA’s website.
At present, executive search firms in India are either using their own network or some private databases to fill up positions of independent directors as and when required. “Despite offering the biggest pool of directors, the IICA’s databank is never a first port of call for the companies. It’s not about quantity but the quality of information that’s more important. In fact, many companies are not even aware that such a databank exists,” said partner at another search firm.
Experts said that if maintained properly, the databank can be effective in diversifying the current base, and give a chance to companies to induct talented people from different backgrounds.
“The search firms are going after the same names which is why some people are holding directorship across multiple companies. The databank can open up new avenues for companies because a lot of people registered on the platform are fresh names who are yet to hold the position of independent directors,” said the search firm head quoted above. Market regulator SEBI allows an individual to be an independent director of not more than seven companies at a time.