The chairman of the Securities and Exchange Board of India on Monday said independent directors must act responsibly and avoid making unsubstantiated remarks. His comments follow on the abrupt resignation of HDFC Bank’s part-time Chairman and independent director Atanu Chakraborty last week.
Speaking after the SEBI board meeting, Tuhin Kanta Pandey said independent directors are required to protect the interests of minority shareholders and follow laid-down processes to raise concerns.
“No one is expected to make insinuations without proper evidence and recordings,” he said.
The remarks come after Chakraborty’s sudden exit citing “ethical differences”, which triggered a sharp fall in the stock and raised questions over governance, even as the RBI said it found no material concerns.
Pandey said there is a clear framework under the LODR regulations and the Companies Act for independent directors. “Where independent directors have any concerns about the running of the company… ensure that they are addressed by the board… and if not resolved, insist that their concerns are recorded in the minutes,” he said.
Further, concerns relating to “unethical behaviour, actual or suspected fraud, or violation of the company’s code of conduct” must be formally recorded, he said.
“We can’t keep things vague,” he said.
On whether SEBI would examine the issues raised in the resignation letter, Pandey said he would not “publicly state anything” but added that regulatory obligations would apply.
He also said the Reserve Bank of India had already taken note of the developments. “The primary regulator… has taken note… and also taken due decisions,” he said, adding that the RBI closely supervises banks.