By Srinath Sridharan, Author, corporate adviser & independent director on corporate boards X: @ssmumbai
A recent resignation of a board chairman framed around ethical divergence has placed the institution of independent directors under an unforgiving public lens. When director exits come without clarity, they do little to resolve doubt, and often deepen questions around intent.
This commentary is not about the entity, about perceived strains between its management and the board, or among individuals within it. It is not about whether a board member breached the expected conduct of a non-executive role. It is not about the culture of the organisation suddenly revealing itself, even if conversations around sales push, mis-selling, and internal pressures continue to surface despite being industry folklore. It is not about presumed power struggles within management, or about the muted behaviour of widely held institutional shareholders, which quietly dismantles the myth that institutional ownership guarantees pristine governance. It is not whether scrutiny of insinuation will hold, or whether an individual’s alumnus, much like institutional power, is enough to make it disappear. It is not even about whether Indian corporates truly allow formal disagreement on strategy and leadership, when many board members know, often unspoken, that they serve at the pleasure of power.
It is about what this moment has done to the credibility of and expectation from independent directors across India Inc.
For now, as commentary expands and facts remain selectively visible, the minority shareholder is rendered largely toothless. That is the uncomfortable truth.
Independent directors exist precisely to ensure representation, voice, and protection of minority shareholder rights. Yet in fast developments, these very shareholders are left most exposed. Institutional investors and ultra-high-net-worth individuals possess both the financial muscle to rebalance and the networks to access qualitative insights that remain beyond the reach of ordinary shareholders.
In such moments, narratives compete. The institution will have one. The leader of the institution often presents another, even as corporate India continues to blur the line between individual and institution. The departing board member carries a third account. A fourth narrative resides within the board itself, among those who know what transpired but remain formally silent, even as fragments surface through unnamed sources. The final layer comes from official quarters even if unofficially, including regulators and the state, especially in a sensitive market environment.
Amidst this, public expectations of independent directors have been dented. It must also be acknowledged that board members operate under multiple, often competing pressures, and their service to corporate governance and the broader economy remains consequential. Episodes such as these, however visible, do not diminish the role they play, even as they compel a more honest examination of it.
There has been an open scepticism about how independent these directors truly are. If an independent director were to rigorously apply judgement to a board agenda, what would follow?
One knows, but seldom reflects, that in life there are two stakeholders one does not choose. Parents and bosses. In corporate boardrooms, similar conundrums define the limits of independence. Independent directors do not operate in abstraction; they function within ecosystems shaped by power, access, and long-standing equations.
Even where regulations assume nomination and remuneration committees act independently in selecting board members, it’s an open secret that such decisions do not move without the explicit or implicit sanction of promoters or influential shareholders, including in ostensibly non-promoter boards. Many thus do not practise independence as much as they learn to manage it. Independence becomes situational, not absolute. And in doing so, the system normalises a version of governance where dissent survives, but only within acceptable boundaries.
Not all independent directors possess a clear voice or a defined vision for the institutions they serve. Many are appointed for their stature, networks, or perceived non-nuisance value. Over time, this shapes behaviour on both sides of the table. Executives grow accustomed to not being challenged. Corporate India has seen non-promoter chief executives remain at the crease for extended periods, often articulating governance ideals while overlooking something as fundamental as succession. As long as valuations rise, even the most sophisticated investors hesitate to disturb equilibrium.
Yet the reality of boards is not about seamless alignment. It is about raising uncomfortable issues and still having the confidence and civility to debate them openly within the privacy of that room.
Such disagreements cannot be fully addressed within the structure of formal board meetings. They call for conversations beyond the agenda.
But many independent directors do not see this as part of their role. They assume they are compensated to attend meetings, not to invest time in navigating complexity between meetings, even as, in certain instances, the foundations of such arrangements may not always be limited to formal remuneration alone. If stewardship is the expectation, board remuneration must reflect the time, risk, and responsibility it entails. It is time for Sebi to revisit this with urgency.
Which leads to a harder question: Are independent directors prepared to be wartime generals? But then, many are peacetime generals. When a crisis emerges, very few rise to the occasion.
Independent directors must be prepared for friction. For argument. For pushback. For conversations that aren’t pleasant or performative. They must learn to ignore the surrounding noise and focus on decisions that serve stakeholders over the long term, even if it requires short-term compromise to stabilise the institution.
This episode will pass. What will endure is a harder question. Does corporate India truly want independent directors who question power, and are those entrusted with that role willing to do so when it matters? Independence must be exercised in the difficult, often uncomfortable stretches within the boardroom, when silence is easier and consequence is real.