SEBI norms should insist on having independent directors on Board one year before IPO filing: Mohandas Pai

livemint.com:

Year 2023 had a series of cases in which founders locked horns with the Board of Directors, bringing corporate governance standards into sharp focus. Byju Raveendran of Byju’s, Bharatpe’s Ashneer Grover and Housing.com founder Rahul Yadav (in his new startup avtar), were all in the news with regard to issues pertaining to their style of functioning. Former Infosys Board member and co-founder of Aarin Capital Partners, TV Mohandas Pai, talks about the importance of having a high-quality Board with capable independent directors that can guide and propel a startup. Mohandas Pai who is on Byju’s advisory council, declined to talk specifically about the edtech company. Excerpts from an interview: A Board can function well only if it has a good chairman.

The chairman is a person who manages the board and who interacts with the management to make sure things go alright. He/she has to balance the interests of the investors and that of the management. The chairman has to be a mentor to the management and a person who is well respected by all.

That’s the only way it will work in a high- profile company. The Board has to talk to the management and lay down the rules of engagement. Power and responsibilities of the Board and the management have to be well defined.

When you have a superstar and active CEO who believes that he’s changing the world, there’s bound to be a problem. There are very few such people in the world and you need them. But when you have such people at the top, you need a chairman with great maturity and skill.

For a listed company, there has to be transparency because third party money is involved. So, norms have to be followed. In many listed companies also, the norms are followed only in letter and word and not