Main Banner
You are here: HomeNews & Events
Training the Board of Directors - Companies Act, 2013
30 Sep 2013

The new corporate environment being heralded in by the Companies Act, 2013 is being welcomed by industry experts and small investors a like. There is no doubt in our minds that this landmark legislation will mark a sea change in the way Indian companies conduct their business.

The question that we seek to raise here is, whether Indian corporations are prepared for the new challenges. 

Section 149 (4) of the Companies Act, 2013 requires every listed company to have on its board at least 1/3rd directors as Independent Directors. This is a step in the right direction as in the long run it would ensure that the affairs of the listed companies are conducted in an impartial and professional manner. Further, this legislation is in line with practices in developed jurisdictions.

The problem however is the acute shortage of experienced & trained Independent Directors available today. The Central Government has taken it upon itself to compile a database of Independent Directors. However as has been experienced in the past the problem is the inadequate levels of training imparted to Independent Directors in the ways of functioning of the Board. Many are unaware of their rights and liabilities as an Independent Director and therefore are unable to contribute in the most efficient manner. The learning curve of newly inducted directors are elongated and thus affect the efficient functioning of the organisation.

According to a joint study by FICCI & Grant Thornton in 2010-11 on ‘Corporate Governance in mid-market listed companies in India’ as many as 85% of respondents stated that there is no structured programme in place for newly appointed directors joining the board. The situation becomes even more alarming in the case of Independent Directors who may not necessarily be intimately aware of the functioning of the Company. Even otherwise the office of a Director is an onerous one and any director either new or enduring should be well aware of his/her responsibilities and rights.  

In the face of the dynamically changing environment, it is imperative that corporate India safeguards its interests and ensure that every Director is in a position to make relevant contribution from the first day itself. The learning curve of understanding the functioning of the Board may considerably be shortened by putting in place a well-structured training programme for all directors focused at bringing forth the best practices and qualitatively informing the directors of the legal as well as socio-economic regime they are functioning in.


For more information regarding Directors Training please click on Directors Training Services tab.