Corporate governance as a buzzword has long echoed in the Boardrooms of India. However, in recent times, India Inc. witnessed corporate governance go bad. Read the recent conflict of interest within ICICI Bank, the Nirav Modi - Punjab National Bank scandal or, in the global arena, fraudulent transactions by Wells Fargo, among other scams. The Board of Directors is one of the most crucial component of any organizations' corporate governance framework. With rising cases of corporate scandals, Indian Inc. brought about a sea of change in its regulatory environment with the introduction of the Companies Act, 2013 ensuring more stringent rules for the Board in terms of its composition, role, functioning, reporting, including performance evaluations of its Board members.

Although the recent failure of corporate governance pointed to various gaps in the regulations governing the functioning of companies, it serves as a wakeup call with a promise for a better tomorrow. The recent recommendations made by a SEBI formed committee in June 2017 under the leadership of Uday Kotak has made recommendations to improve the standards of corporate governance of listed companies in the country. Key recommendations regarding directorship (which includes restricting the number of listed companies in which a person may be a Director), increasing the minimum Board size, having one independent woman Director, and separation of roles between the CEO/MD and the Chairperson, are under consideration.

In the face of the dynamically changing environment, it is imperative that corporate India safeguards its interests and ensures that Board members are held responsible for their actions. Training as a tool and a mandate for Directors is the need of the hour to ensure that best practices are inculcated to create value and safeguard the interests of all stakeholders.

ET this month looks at The Indian Board Room: Role & Challenges. Jay, in the Thinking Aloud segment, drives home thoughts on Board members' responsibilities and the risks associated in this position. On the Podium, Vikesh Wallia, Regional Director, Institute of Directors, spells out the role of Directors in the changing regulatory environment and the importance of training. In the We Recommend segment, we review Bill George's classic leadership book, Discover Your True North, to help unleash the true leader in you. In the Voices segment, continuing on the Living Diversity & Inclusion series, Krupali Bidaye shares her thoughts of the LGBTQ community in India. She also throws some light on the recent discussions surrounding Section 377 of the Indian Penal Code.

In Figures of Speech, we have Vikram's rendition of 'Board' members!

A gentle reminder...Organ Donation Day in India is on 13th of August every year, but not celebrated enough. To know more, please click here to re-visit the subject, Importance of Organ Donations, which we featured in December 2017. Become an active participant - spread the word and save lives!

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Not since the Satyam scam hit the headlines in 2009 has the role of the Board come under so much scrutiny as the recent financial scandals in Kingfisher, Gitanjali and Nirav Modi cases. Corporate fraud is usually not as spectacular like a regular bank heist (even when the financial loss is immense) but when the protagonists are colourful individuals with immense social, economic and political reach, it does create seismic shocks in the system.

Let me begin by stating that to be fair this is not a peculiarly Indian failing. Corporate Boards have failed across the world from time to time and only mega-scandals cause tectonic upheavals - as in the Enron case, or the Banking industry collapse of 2008.

Be that as it may, what is it about the role of the Board Room in India that causes so much consternation? Let's examine what is it that a Board is expected to do. In essence, the Board exists as the trustee of all the stakeholders of a corporation and is the governing arm that approves, regulates and monitors a company's processes that are being executed and implemented by the operating management of the firm to achieve set goals.

The buck finally stops with the Board as the ultimate authority responsible for the corporation's performance, nay existence. Consequently, the members of the Board have an onerous responsibility that is paramount to all matters concerning the firm. No member of the Board should therefore be anything but diligent to the duty that they have volunteered to perform, and which has been entrusted to them by the shareholders.

Leaving aside the above formal rhetoric of a Board member's significant role and importance, the reality is that many Boards are still-born. Take the case of a firm where the promoter (with his family and friends) has a controlling stake in the firm. To meet statutory requirements of a public listed firm the promoter will have a Board populated by worthies. However, the role is bestowed on the friends of the promoters or accomplices with similar interests. Sure enough, there is a conspiracy of silence amongst members thereby providing a free-pass to the promoter to carry-out his designs. When they work (and they often do, as promoters are usually capable individuals driven to succeed against the odds) they have a bunch of happy campers along with them. In the case of large, listed firms, the press too is at the head of the cheer leading party, brought up on the Public Relations press notes provided along with the junkets organized by the firm. At such times, rare is the Board member who digs deep and seeks delicate details or asks awkward questions. Everyone is riding high on the euphoria of success.

While this could be the picture 8 times out of 10, what about the other 2? This is when the promoter's luck has run out and the chickens have come home to roost. Many of the current financial scandals relate to this free-rein offered to the promoter by gullible Board members, many of them illustrious dignitaries in their own right.

Incidentally, I may add that any resemblance of the above scenario with the Kingfisher Group's tale is entirely deliberate. Sadly, this is not restricted to one Group alone - a large number of promoter run-businesses have recreated this scene.

And, lest it be seen as a private-sector problem, let me stress that the case of the large government owned, government-run institutions is no different. Be it public sector Banks (think IDBI, PNB, etc.) or public monopoly business firms (think Air India, BSNL, etc.), the Board members have often been prosaic government nominees or bureaucrats (both former or those currently in office) with access to power and who follow the dictates of political masters without applying their minds on what is truly best for the corporations where the ultimate shareholders are tax-paying citizens.

I wish to reiterate here that we need to differentiate between bad business judgement and malfeasance, misfeasance and nonfeasance. Risk is inherent to all business and businessmen (with active Board support and enthusiastic participation) are susceptible to wrong calls. This includes inability to appreciate technology shifts (case in point, even Microsoft was late to see the emergence of the Web) or reading the market landscape to fend off new competitors (case in point, Nirma versus Hindustan Lever), global regulatory changes where you have no control (recent case of Tariff wars), etc. Such cyclical vicissitudes are endemic to every corporation and create business challenges. A competent, committed and conscientious Board would be alive to such issues and take them in their stride and create a sustainable winning organization. Conversely, a pretentious, avaricious and myopic Board would be too preoccupied in the personal aggrandizement of the members to pay attention to their duty towards other stakeholders (employees, customers, suppliers, lenders, community, etc.). Deplorably, this number too is large.

The all-round failure of institutions of governance and the consequent loss of confidence of stakeholders led to more government action and regulations. Be it the Sarbanes-Oxley Act in the United States or the various amendments to the company law in India, the efforts over the last few decades have been to strengthen corporate governance through various measures. The infusion of Independent Directors and the addition of women on the Board are two examples of the changes being instituted. However, these measures need substance - form alone will not suffice. What is required is competent, qualified professionals who are both independent and free-thinking. Status as a Board member cannot be the driver for inclusion and is no substitute for knowledge, ability and the skills to perform the role as a legitimate and authoritative Board member. The brief of a Board member has changed: it is no longer ornamental. Amongst other matters, upon them rests the daunting task of selecting the right Chief Executive Officer (CEO) mandated to execute the Board approved agenda, besides evaluating this CEO periodically. And, further, to take surgical steps when matters are not going as per the Board's vision. Witness the recent upheaval in two well-respected Groups when this Board assignment has gone badly (Tata and Infosys).

While some have cynically commented that the Independent Director is 'independent' only in nomenclature (after all, this Director too earns a fee), others have pointed to other worrisome matters. The ugly fallout of the Nirav Modi and Mehul Choksi fraud cases involving the Punjab National Bank cases has been the recent decision of the National Company Law Appellate Tribunal (NCLAT) to uphold the Ministry of Corporate Affairs' plea to freeze assets of Independent Directors of these companies. Some well-known and established corporate leaders have become the collateral damage as the government uses heavy artillery to tackle not just a public relations disaster to itself but also to bring to book business charlatans of a very high order. While the matter is sub-judice the seismic waves did send reverberations into the hearts of many Independent Directors much like the post-Satyam days did.

Will this mean that Independent Directors will hesitate to join the Board? Don't rule this out. But, to my mind, that is only part of the message. This is a wake-up call to not just these Independent Directors but also to all Directors (be it from the promoter's family, friend or civil servant) that once having come on to the Board, be vigilant, and play your role with diligence. It is a task that demands your time (apart from your business acumen) and you should be rewarded well for it. If done well, you have a hand in creating the future of the firm. Done poorly, you are contributing to destroying value and livelihoods.

The corollary also is that the firm you serve should also invest in upgrading your knowledge and skills as the rate of change today demands that your competence stays at the competitive edge, failing which you cannot serve the organization well. Any firm that is unwilling to understand this two-way relationship does not deserve your wise inputs and support - and the prudent step would be stay away from such a Board as it could well come back to bite you.

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ET:  What is the role of company Directors - and particularly Independent Directors - in the changing regulatory environment?

VW:  Thanks to the Companies Act, 2013 which has given a completely new perspective to the position of Independent Directors, Board members now have to look at an approach of not only being the custodians of investors' capital but also to play the role as a custodian of the environment and society as a whole. Board members have to be trained and also offer themselves to an evaluation process which was never the case in the past. The position of Independent Directors has brought higher gravitas to Board management and the interests of minority shareholders which will be better looked after. Independent Directors have a bigger role in bringing in transparency to the operations and forcing greater compliance with the law of the land.

ET:  The Indian Companies Act, 2013 heralded in a sea of change amid the dynamic business environment. In this context, why is training becoming an important tool to enhance the skills of Directors for Board roles?

ET:  In your experience, has the Indian Board room become alive to the need for Diversity and Inclusion? How can encouraging more women Directors on the Board bring about change and innovation in a business enterprise?

VW:  Women have been making good progress in all walks of life all over the world and India is no exception. 33% more girls than boys have passed out of NEET in the latest medical entrance exam, which should give us more women doctors 5 years down the line. Likewise, in business management, the flow from the source, i.e., B-Schools, are going to be in favour of girls. Though right now, we have just around 12% women as our Board Directors which is double of 6% that was five years ago. In the next two years, we hope to take this to 20% and achieve our first milestone i.e., 20% by 2020. Currently, there are sectors which have a very good presence of women at the top, i.e., banking, technology, advertising and media. Though we have a long way to go, the progress so far is very inspiring for many more Indian women.

ET:  What are some of the best practices that India Inc. can mirror from other countries in terms of corporate governance? Can you foresee any future challenges in this regard for India?

VW:  Transparency, Democracy and Empowerment are the cornerstones of Governance. With the Government exiting from businesses in the near future, the private sector will have huge investments coming from overseas/public and promoters' share of capital will reduce thus bringing pressure on all of us to be more transparent. FDIs, Pension Funds and Sovereign Funds will only come with the governance parity with Western countries. It will also force us to allow small investors to be more vocal. Employee exploitation will reduce and there will be greater empowerment to deliver more and with greater efficiency and hence a better return on investment (ROI) to one and all. All this is happening overseas and this is already trickling into our country.

ET:  Can you please tell us about the Institute of Directors and your role in this organization?

VW:  The Institute of Directors with its head office in Delhi, was founded 27 years ago by Mr Madhav Mehra and is a Not-For-Profit Organization promoting Ethical Corporate Governance by spreading awareness through our publication and membership programs, certification programs, experience sharing platforms, i.e., events, by encouraging companies with Golden Peacock Awards and through Board evaluation and audit programs. The Institute is chaired by Former Chief Justice of India Mr Venkatchelliah and is presided by Lieutenant General JS Ahluwalia. It runs professionally through a two tier system of employees and honorary advisory teams.

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Have you discovered your True North? Do you know what your life and your leadership is all about? Bill George's classic leadership book answers all of these and is a walk through on the basics of what leaders are made up of. Originally based on first-person interviews with leaders, this book came to the corporate limelight in 2007.

The new updated edition continues to share the author's personal thoughts and lessons from global leaders. George's work, like that of Drucker and Bennis, intentionally crosses the bridge between academics and practice. Based on a foundation from these great minds, the author opens the door to the real source of leadership: within you. George continues to emphasize the fact that once you discover your True North or your internal compass, this will not only unlock your full potential as a leader but also as a human being that will guide you successfully through life. Your True North is an orienting point in a spinning world that will pull you through the purpose of your leadership. The most important thing about leadership is your character and the values that guide your life.

His book is proof of his wisdom and findings which have helped global leaders better themselves and their respective organizations. Divided into three segments, the first titled - Your Journey to Leadership - highlights the striking commonality about the way life stories influences leadership styles. Having examined your life story in detail, the second segment - Developing as an Authentic Leader - delves into five essential elements that will help in personal development; these are: self-awareness, values, sweet spot, support team, and integrated life. Taken together, these five elements will help calibrate your compass to ensure that the steps that you are taking on your leadership journey are consistent with your True North and the way you want to lead your life. While the first two segments were more inward looking, the third section is dedicated to exploring one's leadership journey and your development as an authentic leader. He highlights that leaders do not operate in a vacuum but in real-world settings which are peppered with challenges.

The read has not failed in delivering the qualities that make up the leaders of today. Peppered with instances and anecdotes from world leaders such as Warren Buffett, Arianna Huffington, Jack Ma, Nelson Mandela and others, George echoes his thoughts that leaders are always hungry to discover their True North and to make it their polar star. In his afterword, he looks at the various business challenges which might impact our sight of the purpose of business and the importance of creating value for various stakeholders. This is a classical, must read book to unleash the leader in you and to make a difference in the world. The author hopes that readers will commit to becoming authentic leaders who will discover their True North, to build sustainable businesses and make the world a better place to live in.

Former CEO of Medtronic, Bill George is a Senior Fellow at Harvard Business School. He is the author of four bestselling books and also serves on the Boards of Goldman Sachs and World Economic Forum, among other companies.

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There has been a churn in societies and polities around the world and it has been through ideas about politics, religion, communities, democracy, societies, science and technology, and much more. One of the churns has been in the politics of the LGBT community - the assertion of their rights and the government's responses towards it, particularly in India.

While India took a revolutionary and progressive step in recognising the 'transgender' identity beyond binary genders, along with the right to self-assert one's gender identity, it has remained conservative and calculative about the rights of the other sexual minorities such as the lesbian, gays and bisexual individuals. In the past few days, all eyes have been on the decision of the Constitutional Bench set up by the Supreme Court to decide the validity of Section 377 of Indian Penal Code (IPC) which criminalises homosexuality. Section 377 of IPC affects the entire LGBTQ community, denying them the right of choice to sexual orientation, and therefore denying the fundamental right to life and liberty guaranteed in Article 21 of the Constitution of India.

After years of struggle for the Right to privacy, Right to love, Right to sexual orientation, and the constant repression of the same, the course of waters in Indian politics seem to be changing for the better. This repressive law that came to India as a legacy of the British legal system, is now being validated for its constitutionality, where as it has been long repealed in the same western democracy that brought it to India. While the matter is still sub-judice, the government's response has been that it will not contest the petitions challenging the section and would honour the decision of the Constitutional Bench. Yet, while the decision remains awaited, one can be hopeful of another revolution to take place in India.

The other churn in the LGBT arena has been 'transgender' identity. While we are still learning, exploring, the world of transgender realities, whether it is the issues of the Transgender Persons Bill 2016, that is being debated presently in the Lok Sabha, or their reservations in jobs and education, we are looking for best practices from the western world. This is clearly without appreciating the 'trans' person's sensibilities back home, because while the western notion of transgender individuals still oscillates largely in the binaries, here in India, we recognise various cultural-religious identities related to 'trans' persons giving them a place of distinct identity.

According to the American Psychological Association, 'Transgender' is an umbrella term for persons whose gender identity, gender expression or behaviour does not conform to that typically associated with the sex to which they were assigned at birth. Gender identity refers to a person's internal sense of being male, female or something else. Gender expression refers to the way a person communicates their gender identity to others through behaviour, clothing, hairstyles, voice or body characteristics. While the basic understanding of the term 'transgender' remains to be same even in India, we have created a distinct identity recognising transgender individuals in various legal documents such as passports, Aadhaar card, election voter id card, etc., whereas, in the western world, transgender individuals undergo sex reassignment surgeries and change their gender in legal identities into the gender they would prefer to be addressed as.

With the changing regional and cultural landscape in India, the transgender identities of kinnars, hijras, jogtis, aravanis, change with the changing context of regional histories and cultures. Though the present 'transgender' umbrella speaks of a broader spectrum, these identities pertain to transgender women (biologically born men, who identify themselves as women) and who have been a part of the Indian society. Sadly, they are never assertive of their rights, and have remained marginalised, ostracised and secluded. But much remains to be explored in the distinct identity granted to 'transgender' persons in India, as it also comes down from a legacy of queer histories in Indian mythologies.

In his various books exploring Indian mythology, Devdatt Patnaik has presented queer histories and untold stories of 'transgender and gender fluid' identities. He questions us: does the human mind have the empathy to include gender and sexual ambiguity in civil human society? It does. In every Yuga, new rules come into being that redefine world order. Mahabharata mentions a Yuga when there were no marriages - women were free to go to any man they chose. This changed when Shvetaketu instituted marriage laws. We have lived through a Yuga where we left unchallenged laws of old imperial masters that dehumanized and invalidated sexual minorities. This has to change - hopefully now.

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