Top Public Sector Companies Do Not Have Sufficient Independent Directors

Independent directors in companies are in focus after the recent developments in the Tata Group. But all companies do not have on board the requisite number of independent directors. According to a study of the 2016 annual reports of companies featuring in the Nifty 50 index carried out by CimplyFive, 10% did not have the requisite number of independent directors. These companies, all of which belong to the public sector, are BPCL, NTPC, ONGC, Power Grid and State Bank of India.

The Companies Act, 2013, requires every listed company to have a minimum one-third of their total number of directors as independent, with at least one woman director on their board. The report, titled India Secretarial Practices 2016, carries an analysis of the secretarial practices of companies that form part of the Nifty 50 companies by studying their 2016 annual reports.

Besides board composition, the study has also portrayed the profile of company secretaries in these companies. It reveals that company secretaries of these companies earned an average annual compensation of Rs.97 lakh in 2016. The range of their compensation varied between Rs 20 lakh to Rs 442 lakh. Only six of the company secretaries in these companies were women.

Comparing the compensation with data for 2015, the report states that in 2016, the average compensation fell by 12% while the maximum compensation fell by 11%. However, the minimum compensation increased by 5%. The report expresses concern at this decline and observes that if the compensation available to the newly qualified Company Secretaries is also seen to be softening, this could be the trigger for major introspection.