Headhunters may get to access independent directors' databank
New Delhi, Aug 13, 2024
Synopsis
At present, only companies are allowed to access this data bank for a nominal fee. But since large listed companies and conglomerates often outsource to search firms the job of due diligence of potential candidates, IICA is seeking to make the data bank available to these entities as well.
India is planning to open up its exhaustive records of more than 30,000 independent directors and aspirants to headhunters to make it easier for companies to hire such key personnel to their boards, Ajay Bhushan Prasad Pandey, chairman of National Financial Reporting Authority (NFRA), the country's audit regulator, told ET.
On August 2, Pandey huddled with top executives of 17 major executive search firms, including Korn Ferry, Egon Zehnder, ABC Consultants, Kestria, Pedersen & Partners, DHR Global, Boyden, Sheffield Haworth and KPMG. "We received a very enthusiastic response from them," he said. "They were also asked to suggest ways to further bolster the data bank and its applicability."
Pandey also heads state-run Indian Institute of Corporate Affairs (IICA), with which all independent directors and those aspiring to take on such roles are mandated to register.
At present, only companies are allowed to access this data bank for a nominal fee. But since large listed companies and conglomerates often outsource to search firms the job of due diligence of potential candidates, IICA is seeking to make the data bank available to these entities as well.
Nevertheless, most companies are currently using the data bank to obtain crucial details about independent directors.
The latest plan is expected to widen the universe of candidates, make it easy to choose the right candidates with the right experience, and reduce the possibility of too few people serving on the boards of too many companies, experts said. Also, it will make it more convenient for companies to get more female independent directors.
Widely-tracked database
The data bank is already widely tracked, with as many as 3,411 companies, including most large companies in India, subscribing to it, according to an IICA presentation at the meeting, reviewed by ET.
As many as 30,453 independent directors and aspirants are registered with it, 8,740 of whom are women. As many as 15,045 profiles have been made available to companies looking for details of independent directors. Of those registered, 20,589 are currently serving on boards of various companies.
Training independent directors
IICA is conducting training programmes, often involving top executives of large companies and domain experts, for those aspiring to be independent directors or those wishing to expand their knowledge base on different aspects of the Companies Act or finance, etc., Pandey said. NFRA is acting as knowledge partner of the institute in many of these initiatives.
In 2019, the government amended the Companies (Appointment and Qualification of Directors) rules to mandate that all existing and aspiring independent directors must register themselves with IICA, paving the way for the data bank. Upon registration, they are required to pass an online proficiency self-assessment test within one year.
[The Economic Times]
