Board structure and committees

The board of directors is the top decision-making body of a company. Shareholders elect it, and it appoints and oversees management. In a well-run company, the board sets strategy, approves major decisions, watches over risk and holds managers to account.

Much of the board's real work happens in committees. The audit committee checks the accounts and the auditors. The nomination and remuneration committee decides who joins the board and what senior people are paid. A board's quality depends less on how many independent directors it has and more on who sits on these committees, how often they meet and whether they ask hard questions.

In Indian companies, the promoter often holds the chair, the top executive role and a large share of the votes. Committees led by independent directors are one of the few built-in checks on that power.

Board composition (SEBI LODR Regulation 17)

• At least half the board must be non-executive directors.
• At least one woman director; the top 1,000 listed companies need at least one independent woman director.
• Independent directors: at least one-third of the board if the chair is a non-executive director; at least half if the chair is an executive director, or if a non-executive chair is a promoter or related to one.
• The top 2,000 listed companies must have at least six directors.
• The board must meet at least four times a year, with no more than 120 days between two meetings.
• A non-executive director above 75 years of age needs a special resolution of shareholders to be appointed or to continue.
• From 1 April 2024, every director's continuation on the board needs shareholder approval at least once every five years. This ended "permanent" board seats.

Chair and managing director

SEBI had planned to require the top 500 listed companies to split the roles of chair and managing director, with a non-executive chair not related to the MD. In February 2022, SEBI made this voluntary. Many promoter-led companies still combine the two roles.

The five main committees

Board evaluation

The Companies Act and LODR require a yearly evaluation of the board, its committees and each director. The NRC sets the method. Independent directors must also meet at least once a year without management, to review the chair and the non-independent directors.

Skills matrix

Listed companies must disclose the core skills their board needs and which directors have them. This chart, in the corporate governance report, is a quick way to spot gaps, such as a bank board with no one experienced in risk or technology.