Corporate governance is an evolutionary phenomenon in an emerging market like India. We recognize that a statement with strong portent was made. We are seeing several extraordinary situations that test our corporate governance. In the process, we believe that corporate governance will only get strengthened. The extraordinary situation is atypical.
For instance, in INFY the founder-promoters left the day to day operations of the company in 2014. The company then became board-run and independent of them. The board comprised of independent and professional directors. The board and founders took divergent directions on the way forward for the company. The founders questioned an acquisition decision. The board stood its ground. Shareholders, independent audit, and legal advisory firms endorsed the decision. The founder still didn’t agree with the board and expressed public distrust of the board. The ugliness reached a new low leading to the exit of the professional CEO.
Shareholders will now play a wider role in deciding whether it would be in their interest to support the board or the founders. It is more important to ponder over this extraordinary and overbearing role that shareholders are going to play. It is definitely unusual. It reflects a potential opportunity for shareholders to demand a greater say in affairs of the company. It also presents a unique opportunity for public shareholders to play judge. That in itself is a milestone in the history of Indian corporate governance.
We surely live in interesting times. We could well see a better tomorrow.
“We don’t have to be smarter than the rest. We have to be more disciplined than the rest.” – Warren Buffett