Professional Directors or Professionals as directors!!

Recently the SEBI chief Mr. Damodaran created storm in a teacup when he accused most
directors of corporate India of having made it a habit of getting appointed to the boards of
various companies. The SEBI chief emphasized the following points namely:

Ø Companies must refrain from appointing non shareholder directors
Ø A framework must be developed for proper evaluation of members of the board and to rate their performance
Ø Only professionals must be appointed as directors and not persons who make it a profession of becoming directors.
Ø Over a period of time, every company must aim to align the board mix to the objectivity of the company

Points to be considered by all investors post the SEBI chief’s wake up call:

Ø The present company law allows a person to be a part time director in as many as 15 companies. Allowing a person to hold directorship in 15 companies will only dissipate his energies and dilute his worth. How can he do justice to any one company except in perfunctory form?
Ø Overall independent directors are considered to be disinterested directors and are reduced to mere ornaments in the board
Ø Even Sachin Tendulkar, Kapil Dev and Gavaskar were co opted as directors in a few companies in an unguarded moment and later wisdom dawned upon them, when they reailsed that the companies had used their names to collect funds and siphon them.

Damodaran has sounded the warning bells for Corporate India and for the India growth story to remain intact; it is imperative that the growth drivers of Corporate India act with authority and responsibility instead of envisaging thoughts on the quantum of sitting fees that they would earn by becoming members of innumerable boards!!