Sebi Chief Calls for New Accountability Standards for Independent Directors

During the 2025 Annual Directors’ Conclave in New Delhi on August 8, Tuhin Kanta Pandey, the chairman of the Securities and Exchange Board of India (Sebi), advocated for a significant transformation in the role of independent directors. He urged that these directors be recognized as essential stewards of accountability, rather than merely honorary appointees or friendly critics.

Pandey emphasized that this redefinition necessitates changes across various dimensions. Independent directors should feel empowered to dissent and become well-informed about emerging risks, such as AI governance, cyber threats, and environmental, social, and governance (ESG) disclosures. He insisted that their training must extend beyond a one-time induction process, promoting continuous education and awareness.

Transforming Board Dynamics

Pandey also highlighted the importance of diverse board composition, advocating for the inclusion of talent from various sectors, younger professionals, and regional voices. He stated, “A board that never disagrees is not aligned – it’s asleep.” Emphasizing the value of differing opinions, he argued that such diversity can lead to deeper discussions and more effective decision-making.

The vision he outlined for “shaping tomorrow’s board” shifts focus from mere compliance to a culture of governance that integrates technology into its processes. “Governance is no longer just about policies,” Pandey noted, “but about tone, behaviour, and values in action.” He called for boards to adopt digital tools as assets rather than obstacles, advocating for the use of real-time dashboards that deliver actionable insights instead of overwhelming volumes of reports.

Prioritizing Cognitive Diversity

Pandey’s remarks included a strong call for cognitive diversity within boards. He posed critical questions: “Do we have enough contrarian thinkers in the room? Do we have people who see risk differently — not more fearfully, but more perceptively?” He underscored that the goal must be to create future-ready boards that not only foster long-term stakeholder trust but also engage in challenging discussions that transcend immediate financial targets.

In conclusion, Pandey’s address at the Annual Directors’ Conclave sets a clear agenda for enhancing the effectiveness of independent directors. By redefining their roles and embracing a culture of accountability and diversity, boards can better navigate the complexities of modern governance and secure the integrity of their institutions beyond short-term interests.