Around 637 or 38% of the 1,670 companies listed on the National Stock Exchange (NSE) will need to appoint at least one independent woman director if the recommendations of Uday Kotak panel on corporate governance are accepted, according to a report by Prime Database.
The Uday Kotak committee on corporate governance had submitted its report last week. At present, the rules require that there must be one woman director on the board, either as an independent or executive director.
The report further said 38% — of the NSE-listed firms have the same person as chairperson and MD, and if Kotak Committee’s suggestion of splitting the chairperson and MD’s roles was to be implemented, these firms would have to segregate the roles.
The report added that 256 companies will have to increase the size of their board beyond five members if the committee’s recommendations were to be implemented. The committee recommended that there should be at least six directors on the board.
Further, 326 firms need to change the board composition to ensure that at least 50% of the total number of directors are independent.
The report said the total remuneration paid to the 3,755 of the 5,686 independent directors in FY 17 was less than Rs 5 lakh, if only considering such independent directors who were on the board from April 2016 until March 31, 2017.
The report added if the Kotak committee’s recommendation of a minimum `5 lakh per annum for independent directors were to be implemented, NSE-listed companies, would have incurred an additional `132.63 crore in FY 17.
The report noted that there were 171 executive promoter directors in 116 companies who earned a remuneration of more than Rs 5 crore in FY 17.
The Uday Kotak committee had recommended that if the remuneration of executive promoter directors is more than Rs 5 crore or 2.5% of net profit should be approved by shareholders.
By Sundar Sethuraman