Corporate governance trends in India


Back to Global Corporate Governance Trends for 2024


As term cliffs arrive, boards prioritize refreshment

The Indian Companies Act 2013, established in 2014, allows for two maximum terms of five years each for independent directors.  As this 10 year term comes to an end in 2024, a widespread board refresh has commenced and is expected to continue to drive new appointments.  Companies are likely to use this as an opportunity to adopt a forward looking strategic approach to board composition, as opposed to a “like for like” replacement.


Further tightening of the regulatory ecosystem

The regulator for public listed companies, Securities and Exchange Board of India (SEBI), has been applying a mix of proactive measures to curb malpractices and promote transparency, including recent amendments such as disclosure of communication from any regulatory, statutory, enforcement or judicial authority, verification of market rumors, and enforcement measures to penalize companies for non-compliance with requirements. Building on 2023, such regulatory tightening is expected to continue in 2024.


Increased compliance for Public Sector Enterprises

Until early 2023, Public Sector Enterprises (PSEs) got away with non-compliance of certain requirements by stating that these matters lay with the Government of India. For instance, even today, many PSEs continue to have no independent women directors on their board, pending government appointments through the Public Enterprises Selection Board (PESB.) SEBI is no longer accepting this reasoning and has started penalizing non-compliant entities.  We expect that this will likely spur more proactive compliance by PSEs, particularly relating to board composition.


Family settlement matters become more visible

A relatively unnoticed—but quite significant—new SEBI notification mandates that Promoters (as founders/majority owners are referred to in India) of listed companies disclose all active family settlement agreements or arrangements that have a bearing or influence on management and control of the company to stock exchanges. With roughly 70% of Indian listed companies being family owned, the new rule is expected to have a palpable impact and draw the attention of boards.


A spotlight on start-up governance

Many global VC and PE funds investing in the Indian start-up ecosystem have faced significant governance challenges with founder teams. These have not only resulted in massive capital losses, but also the resignation of auditors and PE nominee directors from boards to avoid regulatory action. We expect institutional investors to significantly increase their focus on governance, as well as demands for experienced CEO experience and skills within the start-up boardrooms.

Furthermore, proxy advisors are increasingly getting their voice heard in shareholders meetings, whether this be related to promoter compensation, director appointments, or related party transactions.  We expect this trend to continue and contribute to a stronger governance landscape in 2024.


Explore more

United States           Canada           Mexico           Brazil           United Kingdom           Spain           The Nordics           Germany           France           The UAE           India           Australia           Singapore & Malaysia