appointments and removal process, with similar requirements being in place for both stages, while it wants audit committee to also focus on forward-looking risk assessment, in addition to retrospective evaluation.
appointments and removal process, with similar requirements being in place for both stages, while it wants audit committee to also focus on forward-looking risk assessment, in addition to retrospective evaluation.
After looking at global practices, the IAB noted that the board evaluation is a very important element in corporate governance and it should go beyond "a box-ticking exercise".
"The process has to be conducive to the growth of the company and can differ from company to company.
"The best evaluation is actually an exercise in self evaluation of the company's own performance and effectiveness in terms of its mission, financial returns, strategy, business model and social responsibility, and in this context, whether the standards expected from the board are being realised," the IAB felt.
The advisory panel, which includes experts from various fields, said it would be a good practice if the result of the evaluation of the board as a whole is disclosed to the shareholders.
It called for boards of listed companies being made aware and educated about the evaluation process and hoped the new guidance note from Sebi will help further this cause.
In its guidance note issued last month, Sebi has emphasised that the role and function of chairperson in board evaluation needs to be laid out clearly in advance in order to achieve maximum benefit of the process.
Responsibilities of various persons, including independent directors, and committees for carrying out evaluation of respective boards as well as the relevant disclosure requirements under corporate governance obligations have also been touched upon in the note.
It also advises that the nomination and remuneration committee will have to formulate the criteria for evaluation of performance of independent directors and other members of the board.
It will determine whether to extend or continue the term of appointment of the independent director, on the basis of the report of performance evaluation of independent directors.
In the meeting of independent directors of the company (without the attendance of non-independent directors and management), such directors will need to review the performance of non-independent directors and the board as a whole, including the chairperson.
The performance evaluation of independent directors could be done by the entire board, excluding the director being evaluated.
"A statement indicating the manner in which formal annual evaluation has been made by the board of its own performance and that of its committees and individual directors shall be included in the report by board of directors placed in the general meeting," it said.
The performance evaluation criteria for independent directors will be disclosed in the section on the corporate governance of the annual report.
(This article has not been edited by DNA's editorial team and is auto-generated from an agency feed.)
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