Board evaluation: A step towards greater governance

By Shruti Rajan and Rohan Banerjee, Cyril Amarchand Mangaldas
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Quis custodiet ipsos custodes? (Who will guard the guardians?) – Juvenal

Since the introduction of clause 49 in the Listing Agreement more than a decade ago, the Securities and Exchange Board of India (SEBI) has paid a lot of attention to the issue of corporate governance for listed companies. A company’s board of directors acts as gatekeeper of the company’s conduct and must ensure that the company operates in a manner that is fair and not prejudicial to its stakeholders, especially the retail investors. Who then stands guard over the directors and the manner in which they function?

Shruti Rajan Partner Cyril Amarchand Mangaldas
Shruti Rajan
Partner
Cyril Amarchand Mangaldas

On 5 January this year, SEBI issued a Guidance Note on Board Evaluation to make the assessment and performance review of directors more transparent and increase accountability to the public stakeholders.

While previously the board evaluation process was voluntary, the Companies Act, 2013, and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, have made it mandatory for listed companies and public companies with paid-up share capital of ₹250 million (US$3.8 million) or more. Such companies must prepare a statement (to be included as part of the report of the board of directors) regarding the manner in which evaluation of the board, its committees and each individual director was carried out.

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Cyril Amarchand Mangaldas is India’s largest full-service law firm. Shruti Rajan is a partner and Rohan Banerjee is a principal associate at the firm.

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Peninsula Chambers,

Peninsula Corporate Park,

Lower Parel, Mumbai – 400 013 India

New Delhi | Bengaluru | Hyderabad |

Chennai | Ahmedabad

Contact details

Tel: +91 22 2496 4455

Fax: +91 22 2496 3666

Email: cam.mumbai@cyrilshroff.com

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