Asish K Bhattacharyya’s article “Independent directors: Are they lame ducks?” (April 16) articulates well the issues concerning the functioning of independent directors (IDs). However, his point that IDs are expected to protect the rights of minority shareholders is incorrect. Every director’s responsibility is exclusively towards the company and its shareholders in general. An ID is not a representative of minority shareholders; he is expected to protect the company from such actions of promoters that might not be in the best interest of the company. Bhattacharyya has missed the most important challenge in the set-up. An ID is normally selected by the promoter. It is quite unlikely that the promoter will select a person about whom he knows nothing. Similarly, given the onerous legal risks run by a director, no sensible person will accept directorship offered by a total stranger. This affinity or a prior relationship can impair the independence of the ID. The challenge is similar to the one that a credit rating agency faces since it is appointed for a fee by the issuer of securities to be rated.
P Datta Kolkata
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