As discussed in our prior post, the Securities and Exchange Board of India (“SEBI”), has sought input from stakeholders on possible changes to Indian corporate governance, following the release of the report from the Committee on Corporate Governance (the “Committee”).regulatory_matters

The Committee, chaired by Mr. Uday Kotak, sought to review prevailing corporate governance practices with the objective of improving practices in a wide-variety of areas, including:

  • Strengthening the board of directors as an institution of corporate governance;
  • Solidifying the role and spirit of independent directors;
  • Enhancing the role of board committees;
  • Improving disclosures and transparency;
  • Raising the level of auditor-related disclosure and auditor accountable; and
  • Improving investor participation within the Indian market.

In our submission, Glass Lewis generally agreed with most of the Committee’s recommendations. However, we were opposed to certain recommendations as they could lead to unintended consequences, while some recommendations, in our opinion, did not go far enough. For instance, give the growing time commitment associated with serving as a director, Glass Lewis has concerns with the Committee’s recommendation to allow independent directors to serve on as many as seven boards. In this instance, Glass Lewis would view a lower cap as being more beneficial for directors and boards alike. Moreover, a lower cap on directorships may serve to expand the talent pool, while more directors would be able to devote the time necessary to fulfill their directorships.

We acknowledged the Committees’ recommendation to improve disclosure of company medium- and long-term strategies. Yet, we believe this disclosure should also become part of remuneration disclosure, especially as Indian companies often do not disclose how executive remuneration is aligned with medium – and long-term strategies and performance.

Finally, Glass Lewis identified some recommendations where implementation could pose unique challenges across the market. Specifically, one recommendation would ultimately see the AGM timeframe reduced from six months, down to five or possibly four months in order to avoid the “bunching of AGMs” in August and September. Yet, by shortening the AGM timeframe, the Committee may not have adequately assessed the issue of how to distribute nearly 4,200 AGMs that were scheduled by the Bombay Stock Exchange in the months of July-September. In this case, we are concerned that a condensing of the AGM timeframe could lead to the bunching of AGMs in August or even in July. Instead, Glass Lewis suggests SEBI examine capping the number of AGMs held on a daily basis.

The full Glass Lewis submission is available to download below. For further information please contact us at