Independent Directors are the cornerstone of Board accountability. In PSUs, however, appointments of Independent Directors are routed through Government departments. This can result in delays, gaps in appropriate Board composition, or overburdening of existing/ sitting Directors.

When Independent Directors are appointed primarily to satisfy regulatory thresholds, rather than to exercise active oversight, independence risks becoming formalistic rather than substantive.

Boards must consider whether Independent Directors have the authority, access to information, and organisational support to act effectively. True independence is not just a regulatory checkbox. It is the ability to influence independent decision-making, ensure transparency, and hold management accountable, even in a Government-majority environment.

For PSUs, the challenge is not lack of rules — it is creating a culture where Independent Directors can function fully despite structural constraints.

The 5th Annual Corporate Governance Survey, covering the Maharatna and the Navratna companies, brought out by Excellence Enablers Private Limited, indicated that 90% of the companies had not fulfilled the minimum requirement in relation to Independent Directors. 

Explore corporate governance practices being followed by Maharatna and Navratna companies in our 5th Edition of Corporate Governance Survey.

Mahima Chopra