The spirit of governance

Directors must exercise fiduciary duties

India Inc appears to be steadily improving its compliance with statutory governance standards. The fifth edition of the Excellence Enablers Survey (EES) on Corporate Governance in Nifty 100 companies shows on various parameters companies have steadily aligned with standards stipulated by the Companies Act and the Securities and Exchange Board of India (Sebi). Board sizes are one index. Given that listed companies need to have five mandatory committees — on remuneration, audit, human resources and so on — companies need to ensure that there are sufficient board members so that the same member does not serve on multiple committees. The EES study shows that the average board size has expanded — from 9.86 in FY21 to 10.52 in FY24 — and 61 per cent of the companies had between nine and 13 directors. Then again, according to Sebi regulations, non-executive directors (NEDs), including independent directors (ID), should comprise 50 per cent of the board. Compliance here has improved significantly.