Independent directors: Enhancing governance
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The life of an Independent Director (ID) was seasonal when it all started. It was once a quarter meetings with preparatory work before the meetings and culminating with closure of the minutes after they get circulated.With the passage of time it has slowly but surely been converted into a 24/7and 365-day affair for a variety of reasons, with enough meat and substance being added through the demands of the regulators and the society at large.First and foremost the regulators — SEBI, NFRA, Corporate Affairs, RBI and IRDA — want the IDs to take a more proactive role now. For them the ID is both the watchdog and bloodhound rolled into one. IDs are expected to be abreast with all aspects of the business and the constant barrage of regulatory changes via circulars and notifications. Anticipating risks and problem areas requires mind time on a daily basis on the various boards.When the going is good all is fine but once a wrong doing or a scam erupts fingers will point on the extent of vigilance exercised by IDs.This brings us to the nub of the issue — how does an ID spend time on the so called lean months? The lean months would typically be June, September and December.Catching upMore often than not several issues that get deliberated at the committee and board meetings have a component called ‘Action taken items to be followed on’. Rather than wait till the next meeting it would be advisable to thrash them out, calling for a specific meeting to discuss those items to ensure they get the required attention.Matters like contingent liabilities which consist of long pending legal disputes with staggering amounts are best looked at closely during lean months going through various legal opinions on the subject as also the relevant court decisions.There are also several current subjects to be dealt with sometimes with external help. These issues would include — Cyber threat matters, application of AI in business and auditor areas, Risk mitigation strategies, best practices of comparable companies.It is just impossible to deal with all these at the time table and agenda-oriented driven regular board meetings.Hence, using the lean months for a focused discussion on matters listed above is bound to enhance the overall productivity of the IDs.Incidentally these months would possibly be the lean months for auditors as well and capturing their time to deep dive into audit practices and solving potential grey areas in accounting matters could reduce the overall audit time to complete the audit.This obviously will be a huge value add to the overall governance machinery. The purpose of using the lean time is to ensure that the regular quarterly meetings are spent discussing current matters and minimum pending issues. The thrust on the regular meetings should be also more on future strategies, market risks and competition.Extra meetings during lean months will certainly pose challenges to company secretaries to undertake the task of writing minutes etc.But the benefits will outweigh the costs more so when AI will in due course take over the responsibilities of minutes writing as well.The logical counter question is are we biting more than we can chew?Already the burden of IDs in regular meetings are onerous. Making them work on lean months is effectively converting them to whole time directors. But then how do we balance the overall expectations of the regulators and the delivery mechanisms in place in the context of IDs?Since prevention is always better than cure, tapping into the lean months is a no-brainer.The writer is a chartered accountantPublished on July 9, 2026
