Center of Excellence for Independent Directors (CEID)
...Creating value on Board
VISION: Create a Platform for Excellence of Independent Directors (ID) & Non-Executive Directors (NED) and interact, share, adopt best corporate practices
Before the commencement of the Companies Act, 2013, the independent directors were defined under the Listing Agreement of the nationalised stock exchanged i.e. BSE and NSE under clause 49 which mentioned the eligibility criteria for acting as independent director on the Board of a listed company. The listing agreement further explained the role and duties of the independent directors. Essence of having transparent board was felt since the fall of Asia Markets in 2007-08 and post the scam of Satyam Computers Limited in which case the window dressing of financial statements were not red-flagged by the independent directors in the committee meetings and board meetings of the Company leading to a huge scam of approximately Rs. 7000 Crore sending wave of shock to the investors and Regulators. Ever since, there has been continuous change in the depth of role of independent directors and revolutionary amends are witnessed in the audit procedures and compliance checklists. For better understanding of the role and liabilities of independent directors, the listing agreements were modified to include mandatory training programmes for familiarisation of independent directors with the company and the industry in which the company operates.
On 1st April, 2014, Companies Act, 2013 was notified and implemented by the Ministry of Corporate Affairs which clearly set out the eligibility criteria, qualifications, roles, responsibilities of an independent director under section 149(6). The Act has also prescribed a code of conduct to be adopted by the Board for independent directors under Schedule IV. In order to align with the Companies Act, 2013 and rules made there under, the watchdog of securities market of India, SEBI, amended various regulations including listing agreement of stock exchanges applicable to the listed companies.
SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR) came into effect from 2nd September, 2015. This Regulation along with Uniform Listing Agreement issued and notified by the SEBI has repealed the erstwhile listing agreements. Amongst others, LODR has clearly set responsibility on the Board of Directors to encourage and continue director training to ensure that the directors are kept up to date and facilitate independent directors for better performance. Regulators have taken serious step to ensure that the independent directors not only add value to the business decisions of the Company but also are aware of their rights, duties and responsibility towards the stakeholders of the company.
Unlike the erstwhile listing agreement or Companies Act, 1956, at present an independent director can serve only in maximum seven (7) listed companies. In addition to above, an independent director can serve only for a limited tenure. This has led to scarcity of independent directors. Moreover, the available independent directors are not found suitable for appointment. Looking at the above adversity, National Kannada Education Society (NKES), a registered society under the Societies Registration Act, 1860, has established Centre of Excellence for Independent Directors (CEID), an organisation focussed on facilitating and creating ‘Independent Directors and Non-executive Directors’ by providing familiarisation and training programmes as intended under LODR. These programmes are conducted to explicate interpretation, better understand the legal sphere and notify the nuances of various existing and emerging regulations applicable to industry and companies. It is strongly believed that this initiative will support corporate and independent directors, particularly, in complying with LODR, companies Act, 2013, Schedule IV-Code of Conduct of Independent Directors and grow suitable for appointment and participate in decision making process at any board meetings and/ or committee meetings of companies. CEID seeks to provide a platform to interact and share experiences leading to continuous enhancement of skills and knowledge and performance in the board room. This platform further looks forward to build upon the best practices of corporate governance and aid value addition through independent directors, as desired by various Regulators in India and abroad, principally, to safeguard the interest of the stakeholders and investors of the companies. CEID is located in the premises of NKES at Sewree - Wadala Estate, Scheme No-57, Indulal - D. Bhua Marg, Road No. 7A, Wadala, Mumbai- 400 031 where it conducts its programmes. For more on this, please log on to www.ceid.co.in