A total of 1,287 independent director posts of companies listed on the National Stock Exchange, are filled by people who have served on the boards of these companies for ten years or more.
The Securities and Exchange Board of India has recently announced changes to regulations, mandating that no person can serve as independent director on the board of the company for more than ten years.
The ten year rule would have affected one out of every five directorship positions across 660 NSE-listed companies, according to a press release from indianboards.com, which maintains data on the composition of Indian boardrooms, created as an initiative between Prime Database and NSE.
However, the Companies Act implements the ten year limit only from after the new rules are put in place which means that these directors get another ten years to serve on their current positions. Sebi has cut this shorter for listed companies, having mandated that those have already served five years can only serve another five.
Pranav Haldea, Managing Director of PRIME Database said in the emailed press statement that a more immediate implementation would have better served the purpose of corporate governance.
“while a fixed term for independent directors is favourable for renewing boards, it would have served a better purpose in case both the Companies Act and SEBI would have made this provision applicable immediately, with, of course, a compliance leeway of one year. Effectively, no new independent director faces are likely to be seen at least for the next 5 years as a result of this provision,” he said.
The longest serving independent director is Klaus Carl Uebel. He has been on the board of Hercules Hoists Ltd. for 51 years, and can now serve for another five.