Mid-term exits by independent directors at highest level since 2017
The number of independent directors in listed companies leaving office this year before the end of their term is the highest since 2017. There have been 510 resignations as of the middle of December. The figure last year was 393. The number of exits has picked up significantly since the pandemic. There were 265 mid-term cessations in 2019, the year before the pandemic.
The recent years have brought greater expectations and scrutiny for independent directors. Resignations have been attributed to a range of factors, including pre-occupation with other commitments, personal reasons and health issues. Some directors cited regulatory requirements, conflicts of interest or appointments to other boards, while others stepped down due to relocation or age. In several cases, no specific reason was disclosed. Smaller companies accounted for a significant share of exits. Firms with market capitalisation below Rs. 100 crore saw 142 resignations, while those valued between Rs. 100 crore and Rs. 1,000 crore recorded 191 exits. Less than 12 percent of resignations came from companies with market capitalisation of Rs. 10,000 crore or more.
The churn follows regulatory changes under the Companies Act, 2013, which limit independent directors to two consecutive five-year terms, alongside heightened institutional scrutiny of directors holding multiple board positions.
