Mid-term exits by independent directors at highest level since 2017

Clipped from: https://www.business-standard.com/industry/news/mid-term-exits-by-independent-directors-at-highest-level-since-2017-125122600011_1.html

Many from companies with less than ₹100 crore in mcap

Independent director resignations hit 510 in 2025, the highest since 2017, reflecting growing scrutiny, governance pressures, and regulatory changes. | Illustration: Ajay Mohanty

Listen to This Article

The number of independent directors in listed companies leaving office this year before the end of their term is the highest since 2017, the earliest year for which the data on this is available.

There have been 510 resignations as of the middle of December, shows the data from primeinfobase.com. 

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 last few years have seen more pressure on independent directors to deliver, according to Shriram Subramanian, founder and managing director, domestic proxy advisor InGovern Research Services. “There is an increasing (amount of) focus and scrutiny,” he said. A proxy advisory firm provides guidance on company resolutions, including the appointment of directors, to shareholders. 

The reasons given for the resignations include being occupied with other matters, and personal and health factors. Some have cited regulatory norms, joining the board of other companies, and conflict of interest. 

Some exited due to shifting to other places of residence, and old age, whereas some others have given no reason for their exit.

Those valued at less than ₹100 crore accounted for 142 exits. There were 191 among companies valued between ₹100 crore and ₹1,000 crore. Less than 12 per cent of the exits were from companies with ₹10,000 crore in market capitalisation or above.

Anecdotally, shareholder feedback suggests that the average large company often has reasonably high governance standards while that is not always true for smaller companies, suggested Amit Tandon, founder and managing director of proxy advisory firm Institutional Investor Advisory Services (IiAS) India.

That said, people are becoming more aware of their responsibilities, according to Tandon. 

“The conversation has shifted from ‘it is a privilege’ to be on the board of a company to ‘it is a responsibility’,” he said.

The exits come after a period of churn following regulatory changes capping the stay of an independent director to two consecutive five-year terms. This came following the Companies Act, 2013. There has been increased institutional scrutiny of the number of companies that directors are serving, according to an earlier report by IIAS.

“Global investors, and some domestic investors, are raising concerns on the over-boarding of independent directors. Indian regulations allow individuals to hold up to 20 board positions, of which a maximum of 10 can be in public limited companies. Of these 10, Indian regulations allow individuals to hold up to seven board memberships as independent directors in listed companies. For executive directors of listed companies, board memberships have been capped at three in the position of independent directors. The benchmarks globally are much lower,” it said.

The sector with the largest number of mid-term cessations is textile, followed by software and fast-moving consumer goods. All of these this year had 30-40 mid-term resignations.  But the trend seems widespread. Exits are seen in companies in over 60 sectors and the top five account for less than a third of the total.