Proficiency of independent directors: an Indian corporate governance perspective

Abstract

Purpose Independent directors (IDs) in India are required to qualify for the online proficiency self-assessment test to acquire or retain their position on the corporate boards. The purpose of this paper was to examine the perceived positive and negative aspects of the new mandate for the overall quality of corporate boards in India. Design/methodology/approach This study used a qualitative methodology and applied the interpretative phenomenological analysis approach. Data was collected from board members using semi-structured interviews. Findings This study revealed the positive and negative perceived aspects of the mandatory policy prescription of proficiency test for IDs. It was found that the participants emphasized training and mentoring programs for the IDs. Practical implications Drawing upon the actual board experiences of the participants, this study has the potential to assist policymakers in making regulations that are more effective in enhancing the quality of corporate boards. The example of action taken as well as the criticism or positive aspects pointed out can generate interest in other legislators. Originality/value The concept of proficiency test for IDs is unique to India. A review of literature did not reveal the existence of any regulatory provisions for a mandatory uniform test for examining the proficiency of IDs, in any corporate law jurisdiction apart from India.