The Confederation of Indian Industry (CII) on Monday called on India Inc to clearly delineate the role of independent directors and to allow them to serve up to ten years, as it highlighted their role in ethical decision-making, accountability and sustained organisational success.
Unveiling the guidelines on the appointment of independent directors and the process of board evaluation, aimed at bolstering corporate governance, the industry body also called on companies to view succession planning as a continuing and holistic approach, rather than an episodic event. The CII said the management must provide a detailed report of the key developments to independent directors between two board meetings.
It suggested that an independent director be appointed for two terms of five years each, based on performance and the needs of the situation. This will also help the companies achieve their long-term goals, it said.
The guidelines are recommendations and not binding on any company.
Among other recommendations, the CII guidelines stressed on diversity in the board, going beyond just gender diversity, indemnifying the directors through insurance, compensation matching the increased role and responsibility of directors and setting up a systematic evaluation process of the board of directors.
The industry body also said that corporations must surmount challenges that transcend boundaries and that the corporate governance model needs to adapt to the global challenges thrown at it.
