SEBI Proposes Capacity-Building Network to Strengthen Independent Directors

SEBI Chairman Tuhin Kanta Pandey announced plans for a capacity-building network to improve the standards of independent directors. Speaking in Kolkata, he emphasized the need to balance regulatory oversight with operational independence while addressing emerging corporate governance challenges.

The Securities and Exchange Board of India (SEBI) is planning to establish a capacity-building network aimed at strengthening the system of independent directors. SEBI Chairman Tuhin Kanta Pandey announced the initiative during a session at the 125th anniversary celebrations of the Bharat Chamber of Commerce in Kolkata.

The proposed network is intended to bring together key institutions, professional bodies, academia, and industry chambers to upgrade the overall capabilities of independent directors. Pandey stated that a consultative process for the initiative will be launched soon.

Addressing the gathering, Pandey highlighted the evolving responsibilities of independent directors, which now extend beyond basic regulatory compliance to include safeguarding shareholder interests and improving overall business performance. He noted that the role should not be viewed as a part-time assignment or a showpiece engagement, given the increasing complexity of modern corporate governance.

According to the SEBI Chairman, independent board members need to engage actively in emerging areas such as cybersecurity, artificial intelligence, sustainability, and human resource transformation. He emphasized that their contributions should drive positive outcomes and support the long-term growth of businesses, particularly for the protection of minority investors.

On the regulatory front, Pandey discussed the importance of striking a balance between accountability and operational independence. He stated that SEBI aims to maintain proportionate oversight and avoid placing excessive burdens on independent directors. Regulatory pressure, he noted, should not hinder their independence unless there is evidence of serious misconduct or dereliction of duty.

Pandey also mentioned that SEBI is looking into streamlining compliance requirements, removing overlaps, and reducing the compliance burden through regulatory changes and technology adoption. However, he clarified that certain safeguards remain non-negotiable, particularly in areas like related-party transactions where investor interests could be at risk.

"SEBI's initiative to build a collaborative capacity network for independent directors is a timely step for the corporate and startup ecosystem. As businesses grow more complex with emerging technologies like artificial intelligence and cybersecurity, the role of independent board members is critical. Striking the right balance between regulatory accountability and operational independence will empower boards to protect shareholder interests effectively without stifling business growth." — Dr. Shishir Gupta, Founder & CEO, StartupLanes