The Securities and Exchange Board of India (SEBI) is likely to keep the proposed training workshops for independent directors voluntary, a shift from its earlier plan to make participation mandatory and potentially link it to their reappointment, people aware of the discussions said.
The first workshop, earlier expected to be held in September-October, is now likely to be rolled out after Diwali. The Bombay Chartered Accountants Society (BCAS), the National Institute of Securities Markets (NISM) and the National Stock Exchange (NSE) are working on the programme, with the BCAS proposal still awaiting inputs from NISM and discussions with the exchanges and regulator.
The workshops were originally proposed as a mandatory, biannual training programme for independent directors, with attendance potentially linked to reappointment after completion of a five-year tenure. The proposal was aimed at creating a system of continuous professional development for independent directors, similar to continuing education requirements applicable to some other professions.
However, SEBI is not keen on making participation mandatory from the outset. “The idea is to first conduct the programme, let independent directors see its value and then look at how it can be taken forward. Making it mandatory from the start can create opposition and unnecessary restrictions,” a person aware of the discussions said.
The programme will therefore initially focus on building participation and using feedback from independent directors to refine the format before considering whether a mandatory framework is necessary, the person added.
The BCAS has submitted its plan to NISM, which will provide suggestions and consult SEBI before the programme is finalised. The proposal is also pending discussions at the NSE, with the programme envisaged to be held at the NSE auditorium.
“The chairman was very positive about the initiative, but asked us to consult the NSE and work out the modalities,” another person said, referring to discussions with SEBI Chairman Tuhin Kanta Pandey.
The workshops are expected to focus on practical learning rather than a formal examination or licensing requirement. The programme is expected to use recent case studies and regulatory developments, with feedback from participants used to improve subsequent sessions.
capacity building
SEBI had announced plans for a capacity-building initiative for independent directors after the resignation of Atanu Chakraborty as chairman and independent director of HDFC Bank earlier this year. Chakraborty had cited practices at the bank that were not in line with his personal values and ethics.
Following the episode, Pandey had said SEBI would work on a joint capacity-building initiative for independent directors and stressed the need for a “continuous, structured and collaborative approach to learning” for board members.
BCAS had subsequently worked on a curriculum covering areas such as regulatory developments, fiduciary responsibilities, risk governance and emerging issues including technology and cyber risks.
The current proposal, however, would begin as a voluntary capacity-building exercise rather than the mandatory continuing education framework envisaged earlier.
An email from queries sent to SEBI did not elicit a response.