Citizens' Issues
Many top companies fail to carry out quality corporate governance

Proxy advisory firm InGovern has highlighted where independent directors and statutory auditors of top listed companies have exceeded their tenure

An analysis by proxy advisory firm InGovern, of the top 100 companies that form part of the Nifty and Junior Nifty indices, shows that the average tenure of independent directors in the top 100 companies is about seven years. In as many as 21 companies, independent directors had average tenure of more than nine years and there were 23 companies where more than half of the have served on the board for more than nine years, which is not as per best practice. The report also highlights that out of the 100 companies analysed, only 45 companies have all independent directors in its audit committee. As many as 21 companies have executive directors as part of their audit committee, which is not a good corporate governance practice. The Companies Act, 2013 limits the tenure of independent directors to hold office up to two consecutive terms, each term of up to five years. Independent directors will be eligible for appointment only after a cooling period of three years.


Many companies failed to comply with the Listing Agreement. As many as 13 companies did not have an independent director or non-executive director as chairman and hence were not in compliance with Clause 49 of the Listing Agreement. The Listing Agreement mandates that for listed companies, where the chairman is an executive director or a promoter, the Board should be constituted with at least 50% independent directors. Out of the top 100 companies, 20 companies had less than 50% independent directors on their Boards. Of the 20 companies, four companies had an independent director as chairman, three had a non-executive director as chairman.


“Only 45 companies had audit committees comprising only of independent directors,” the report highlighted. As many as 21 companies have executive directors as part of their audit committees, which is not a good corporate governance practice. The average number of audit committee members in the Nifty and Junior Nifty companies was approximately four. Out of the 100 companies analysed, only 45 companies have all independent directors in its audit committee. The Listing Agreement mandates listed companies to have a minimum of three directors as its audit committee members, two-thirds of which shall be independent directors along with the chairman of the audit committee being an independent director.

Of the 100 companies, as many as 36 companies have retained the same audit partner for more than 10 years. The average tenure of the statutory auditors in top 100 non-public sector undertaking (PSU) listed companies was approximately 10 years. Barring public sector companies, where appointment of auditors is done by the Comptroller and Auditor General (CAG) on a three year rotation basis, out of the remaining companies, 60 companies have had the same statutory auditors for more than 5 years. The Companies Act, 2013 prescribes a mandatory rotation of audit firm for listed companies post 10 years and also restricts the maximum number of companies that can be audited by a partner in an audit firm to 20 companies.

Five of the top 100 companies have close to half of their independent directors holding more than 10 outside directorships. Nearly 8% of the independent directors on an average in Nifty and Junior Nifty companies have outside directorships in more than 10 public companies. The Companies Act, 2013 limits the maximum number of outside directorships for all directors to 10 public companies and 20 companies in total.


As a corporate governance best practice, InGovern suggests that shareholders should vote against re-appointment of directors who attend less than 75% Board, annual general meetings (AGMs) or committee meetings or have not discharged their duties as director. The average board attendance in 2013 was 88% for companies forming part of the Nifty and Junior Nifty indices. Around 17% of the directors on an average attended less than 75% of the Board meetings.

The report mentions that there was a 6% year-on-year decrease in number of resolutions passed. There were 4,012 resolutions proposed in the proxy voting season of 2013 by Indian listed companies forming part of the coverage universe (585 companies of the S&P 500 and BSE 500 indices) compared to 4,271 resolutions passed in 2012 proxy voting season. There were 3,474 ordinary resolutions and 538 special resolutions proposed by Indian companies. Out of the total resolutions, 3,518 resolutions were proposed by management and 494 resolutions were proposed by shareholders.

The report further listed the resolutions passed by companies in 2013 came under severe media, investor and/or regulatory scrutiny due to non adherence to good corporate governance practices. The table shows a few examples of such resolutions that came under larger investor scrutiny in 2013:




Sujan Sharma

4 years ago

In this modern tech world it is becomes very important for all organizations to adopt the policies and procedures of good corporate governance along with ethical behavior

Ramakrishna K

4 years ago

I appreciate the efforts put in by the Money Life research team in preparing the reports.

I wish the Government / the concerned / regulating authorities make use of such reports by Independent reporters, fine / penalise the companies for not abiding the rules / regulations and part / pay a percentage of the penalties to the such reporters. This process brings Good Governance and Best practices to the Companies/ Organisations. Also the companies be informed that there are agencies / reporters do keep a watch / eye for their wrong doings. Wish this message is debated seriously and brought into the cognizance of the concerned authorities.

Ramakrishna K

nagesh kini

4 years ago

Thanks to InGovern, the various breaches in the Good Governance Practices, that were soved under the carpets all along are coming out in the open. That compliance requirements are being breached by the so-called high-n-mighty of our corporate world with gross impunity is distressing and needs not only to be condemned but needs to be set right by legislative fiat.
The extremely long seat occupying members of the board will one day be rewarded with 'Long Service Award' and statutory Gratuity and Pension benefits! They are permanent fixtures are may have their pre-fixed reserved places at Board Meetings too.
The guilty are from both the top guns of the Indian private sector giants but even the Govt. of India undertakings.
In a study of the Indian Hotels it was pointed out that some directors are not present regularly and absent at AGMs. There is no woman director in an industry that has as many as half women employees. The strenght of the ID is violated.
The Auditor parnter rotation is a sham what is required is the rotation by CAG type. The CAG overseeing the statutory audit is enough good governance.
All that is required is a closer scrutiny by the ROC and stricter implentation and enforcement by the MCA and extremely alert investor bodies. The industry bodies dominated as they are by the very same guity has comnflicts of interests and will dare not be any party to expose wrong doings!

Nifty, Sensex trend continues to be up: Monday closing report

After a sharp run up on Friday, the markets today were choppy. There is no sign weakness as of now

On Monday markets opened strongly but reacted almost soon after. The morning session was mostly positive while the afternoon session was mostly in the red. In the final session there was a sudden drop to the low of the day, immediately followed by a sharp pull back almost towards day’s high the fag end of the session.

The S&P BSE Sensex opened at 20,915 to touch intraday high of 20,971 and then hit an intra-day low of 20,768 before closing at 20,894 (up 11 points or 0.05%). Nifty opened at 6,202 hit a high of 6,219 then hit an intra-day low of 6,163 during early trade before closing at 6,205 (up 16 points or 0.25%).

The number of advances outpaced the number of declines by nearly 2:1. Out of 1,219 stocks, 764 were up, 393 were down and 62 were unchanged. The National Stock Exchange witnessed volumes at 69.21 crore shares.

All the sectoral indices finished in the green, except for FMCG and IT which were down 1.39% and 0.44% respectively. The strongest mover was CNX Media which rose 3.41%.

Of the 50 stocks in the Nifty, 36 stocks advanced and 14 declined. The top five gainers were Asian Paints (8.81%), L&T (6.20%), DLF (5.94%), IDFC (4.82%) and Maruti (3.55%). The top five losers were Jindal Steel (-3.54%), ITC (-2.67%), TCS (-2.07%), HCL Technologies (-1.68%) and BHEL (-1.52%).

The late pullback in the markets can be attributed to the fact that WTI Crude oil prices have declined below $100/barrel for the first time since July. This is a psychological threshold. This is expected to boost markets in the next one or two trading sessions as investors see this as a positive factor in easing the Indian current account deficit (CAD).

Investors are still cautious and not overtly optimistic in equities. Gold prices rose to $1,320 an ounce while silver rose 1.4% to $22.18 an ounce.

All Asian markets were up except for Taiwan which was 0.26% down. Majority of the European markets trading flat. The US futures were trading flat at time of writing this piece.


Railway activist coordinating with hospitals for attending accident victims

After the abrupt closure of Bhagwati Hospital in the suburbs, railway accident victims were again being shunted around during the crucial golden hour after the tragedy. Activist Samir Zaveri is working to ensure that Sion Hospital, Nair Hospital and KEM are onboard to help Mumbai’s railway commuters

Last week, media reports announced that Bhagwati Hospital in Mumbai’s suburbs, to which railway accident victims in the suburbs used to be rushed, had abruptly shut down. Media reports further said that the immediate consequence was that accident victims were being shunted from one hospital to another and often lost precious time or their lives, because of the uncertainty. Railway accident victims in the Mira Road to Virar stretch are either being sent to private hospitals or “stabilised” at the BMC-run Shatabdi Municipal Hospital in Kandivili or Bhagwati hospital in Borivali and then to bigger hospitals like KEM, Sion or Nair hospital at Mumbai Central for treatment. Unfortunately, the two municipal hospitals are not well equipped to deal with major injuries, while other bigger hospitals are reluctant to accept these patients.


The refusal by big hospitals to admit accident victims has always been a serious issue and one of the factors responsible for hundreds of lives being lost every year. This issue has also been the subject of a Bombay High Court order. For the record, nearly 3,500 persons die due to railway related deaths every year on the Mumbai suburban railway network alone.


The Samir Zaveri Railway Helpline, spearheaded by activist Samir Zaveri, who himself lost both his legs in a railway accident at the age of 16, has now sprung into action to get alternatives onboard. Activist Zaveri, whose contempt petition filed in the Bombay High Court led to the framing of details and charges to be paid to private hospitals for the treatment of accident victims, has wrote to the deans of KEM, Sion and Nair Hospital. Mr Zaveri is seeking their cooperation to ensure accident patients or victims are provided immediate treatment in coordination with the railway authorities.

The response has been extremely positive. Interestingly, Saifee Hospital at Marine Lines in south Mumbai has not only assured free and fast treatment for rail accident victims, but has also put up a board to this effect. Also Dr Supe, additional-in-charge of Sion Hospital, has verbally assured Mr Zaveri that railway accident victims will not be refused admission and treatment.


Speaking with Moneylife, Dr GK Singh, medical officer at the Divisional Railway Manager’s office at Mumbai Central said, “The population of the area stretching from Virar to Mira Road has increased by several folds within the past 20 years. The government and the municipal corporation should take a note of that and build hospitals in these areas. Also huge part of this population is poor who cannot afford treatment in private hospitals.”



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