More Corporate Boards Are Now Chaired By Independent Directors

Large companies in India, Jio Financial Services Limited and Asian Paints Limited, are appointing experienced individuals as chairmen to ensure fairness for everyone involved in their business. These chairmen are usually highly respected figures in their respective fields. The trend is gaining momentum as companies focus on good corporate governance, transparency, and commitment to stakeholders.

For instance, Infosys set the precedent by appointing independent directors as chairmen. This practice is a way to emphasise equitable treatment for all stakeholders, even in firms with strong founders. It doesn’t mean the original leaders won’t consider the interests of others. A report in The Economic Times cites examples of Tata Technologies Limited and Crompton Greaves Consumer Electricals Limited, which have recently joined this trend by selecting Independent Directors as chairmen. The Reserve Bank of India (RBI) recommends that banks have Independent Directors as Chairmen too, as seen with Axis Bank appointing NS Vishwanathan.

These Chairmen wield significant influence in shaping the company’s strategy and direction. It’s not just about appearances; it’s about professionalism and fair treatment of everyone. This trend began due to regulatory suggestions, but companies now voluntarily adopt it to signal their commitment to high corporate governance standards, especially to proxy advisors and investors.