A key member of the Narayana Murthy panel, Manubhai Shah, has expressed dissent over the views of the panel on the role and definition of an independent director.
Shah is the managing trustee of the Ahmedabad-based NGO, Consumer Education and Research Centre.
In a letter to N R Narayana Murthy, chairman of the SEBI committee on corporate governance Shah has said that there is no definition of an independent director.
He says that a couple of international codes on corporate governance explicitly say that an independent director should be elected from the constituency of minority shareholders.
Further, Section 265 of the Companies Act, provided for proportionate representation of directors but it was not mandatory.
A couple of international codes on corporate governance explicitly defines the concept of independent directors as those elected by the constituency of minority shareholders from them as an independent director.
Section 265 of the Companies Act, 1956 has provided for proportionate representation for appointment of directors on the board.
Of course it was a permissive provision left to each of the companies to provide for the same in its articles of association.
He points out hat in the last 46 years not a single company has made such a provision in its article of association.
