'Treat independent directors as stewards of accountability'

Time of India

5 days ago

NEW DELHI: There is a need to redefine the role of independent directors, and company boards must treat them as "stewards of accountability" and not as honorary appointees, Sebi chairman Tuhin Kanta Pandey said on Friday.
He called on boards to equip themselves to meet the challenges of the future.
"They must be viewed and treated as stewards of accountability," Pandey said in his address at the Institute of Directors' 35th Annual Directors Conclave in national capital. He highlighted three changes that are required, which include the selection of independent directors, orientation, and psychological safety.
On the issue of selection, the Sebi chief urged companies to move beyond familiar networks and known circles and draw from diverse experiences, different sectors, younger professionals, and regional voices.
He said many directors are highly qualified but unfamiliar with emerging AI governance, cyber threats, or ESG disclosures. He asserted that orientation should be ongoing and not just a one-time induction.
Pandey said the most important change was psychological safety, and independent directors must feel free to dissent and question if the information is not robust. "Because a board that never disagrees is not aligned, it's asleep.
Divergent views, when rooted in purpose and mutual respect, strengthen the board. They test assumptions, lead to deeper discussions, and constructive decision-making," said the Sebi chairman.
Apart from redefining the role of independent directors, Pandey also highlighted other shifts that are required for company boards to meet future challenges. He identified moving from compliance to culture, embracing technology for smarter governance, diversity beyond demographics, and reimagining the board of the future.
"Now, let's take a moment and reimagine the boardroom of the future. It's not a ceremonial forum, but a learning organisation," said Pandey. "It doesn't just protect company value; it creates long-term stakeholder trust. It doesn't avoid the uncomfortable questions; it insists on them to open up the blind spots, and it understands that its duty is not just to the promoter or the quarterly target but to the integrity of the institution," said the Sebi chief.
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