There is need for substantiation and accountability when independent directors resign from company boards, said Tuhin Kanta Pandey during the latest SEBI Board meeting. Pandey was addressing questions post the board meeting about HDFC Bank's part-time chairman and independent director, Atanu Chakraborty having stepped down earlier this month, citing that certain practices over the past two years were "not in congruence with my personal values and ethics."
Addressing the issue directly, Pandey went on to stress the responsibilities of independent directors under existing guidelines: "For Independent directors there is a code for independent director, Independent directors are also desired to adhere to a code of conduct. Independent directors can record their concerns in the minutes of the meeting. It can't be just a general thing."
Pandey reiterated the importance of evidence-based commentary, saying, "No body should make such comments, without significant substance. You just can't say anything and go, you have to substantiate."
He further elaborated that resignations should include clear, confrontable grounds.
"Any independent director, when they mention the reasons in their resignation, they should be able to confront it. You need to mention on what grounds. It should be a part of the Board meetings' minutes as well."
Pandey's remarks appear to reinforce SEBI's long-standing push for stronger corporate governance, including proper documentation of dissent or concerns in board minutes and adherence to the code of conduct for independent directors under the Companies Act and SEBI's Listing Obligations and Disclosure Requirements (LODR) regulations.
The HDFC Bank episode has already prompted responses from the Reserve Bank of India (RBI), which has stated there are no major governance concerns at the lender and approved an interim transition arrangement.
SEBI, as the overseer of listed entities, continues to monitor such developments for compliance with disclosure and governance norms.
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