Summary
- A recent SEBI order highlighted serious lapses in board evaluations, revealing that independent directors often fail to scrutinize financial statements adequately.
- Despite mandatory evaluations under Section 134(3)(p) of the Companies Act since 2013, many boards treat the process as a mere formality rather than a meaningful assessment.
- The NSE-IiAS study shows only 11% of companies use external evaluators effectively, raising concerns about genuine oversight and accountability.
- As evaluation outcomes increasingly influence director reappointments, boards must shift from box-ticking to actionable insights to avoid regulatory penalties and reputational risks.
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