There should be a cap on the pecuniary benefits earned by independent directors serving on boards of companies, according to Mr N. Ramanathan, Managing Director, Ponni Sugars. At a panel discussion on issues relating to board of directors and independent directors in the Companies Bill 2009, he said for a company it is just a small percentage of revenue, for the independent director it may be huge sum of money. Therefore, there must be a limit in terms of a clause capping the pecuniary benefit received by the independent director with reference to his total income.
At the meeting organised by FICCI in association with the ICSI, Mr Ramanathan welcomed the Ministry of Corporate Affairs move to cap the pecuniary benefit – the monetary benefit received by the independent director apart from his sitting fees – at 2 per cent rather than at 10 per cent proposed earlier.
The proposed Companies Bill 2009 states that an independent director as liable as any other director on the board of the company in case of fraud even when he may not be a party to it. To protect innocent independent directors, an ‘immunity’ clause may be included when it has been found that he played no role in the event of fraud, he said.
Speaking on ‘corporate governance and corporate social responsibilities’, Mr V.N. Venkatanathan, Executive Vice President – Finance, Sundaram Clayton, said that providing incentives in the form of tax concessions would encourage corporates to take up CSR activities. Thereby a significant improvement on the society could be done in terms of infrastructure upgradation, health and environment. This would be a better alternative than asking companies to provide reasons for non compliance on CSR, he said.