Not many agree. Pai says a company is a collection of interest. “So, an independent director must keep in mind the interest of all stakeholders. If he represents the particular interests of say, minority shareholders, he will squeeze out the employees or customers—equally important stakeholders,” he says. Infosys has experts on global strategy, finance and accomplished academics on its board. Haldea, however, wonders why such people must be brought in as independent directors when they can be hired. “The truth is, in India, not many promoters care for small shareholders,” he notes. Goswami, not quite on the same page as Haldea, however, agrees that ‘good’ independent directors are hard to find. “Maybe just 50-60 companies in India have quality boards,” he says. The universe of listed companies is at least 30 times this. But Goswami says, “If these 50-60 companies account for 85-90 per cent of India’s market capitalisation, then I am fine.” Government-appointed directors, though, will be akin to government control.

There are a few companies such as Infosys that have raised the bar on corporate governance. The company appointed Deepak Satwalekar, MD and CEO of HDFC Standard Life, as its lead independent director in June 2003. He is authorised to call a separate meeting of Infosys’ independent directors without any representative from the management. They can hire consultants, lawyers or experts to independently evaluate the management’s decisions.

SEBI, GOVT SILENT

In 2005-06, Damodaran, then the SEBI chief, went on a hot pursuit of companies that did not bother to comply with Clause 49 of their listing agreement with the stock exchanges. The clause stipulated that independent directors must make up 50 per cent of their boards. “I sent notices to the top five public sector undertakings to convey the seriousness,” says Damodaran. But, SEBI lost steam in due course. Corporate India cried hoarse that there were not enough independent directors.

... contd.