Indian boards are meeting a tad more often

ET Intelligence Group: Indian boards are seem to be meeting slightly more frequently than they were earlier. The median number of meetings for 91 of the BSE 100 companies was seven in fiscal 2019, compared with six in FY18 as well as five years earlier in FY15, as per data from Bloomberg. Five was the most common number for board meetings held by the companies in the year ended March 31, 2019.

Public sector undertakings (PSUs) have a higher frequency of board meetings. The median number for the 16 PSUs in BSE100 index was 13, compared with 11 in FY15. Coal India topped the list with 21 board meetings in the last fiscal year ended March 31. The company’s board had met seven times in FY15.

Incidentally, the sitting fees for independent directors of PSUs is Rs 40,000 - around one-third of the statutory limit of Rs 1 lakh. ICICI Bank is the only privatesector company on the list of top 10 companies, with 18 board meetings in FY19. The bank’s board had met seven times in FY15. Incidentally, a dozen companies have had a sharp year-on-year surge in the frequency of their board meetings in FY19. This list is dominated by banks, with ICICI Bank, Bank of Baroda, Punjab National Bank, State Bank of India, Yes Bank, IndusInd Bank and Axis Bank featuring among these dozen companies. Banks have been under increased scrutiny of the regulators and investors, warranting a higher engagement for their boards. Hindustan Unilever, ITC, Larsen & Toubro, HCL Technologies and REC are the other companies on this list.


In the case of nearly half of the 91 companies, a positive correlation was found between the frequency of board meetings and their stock performance. The boards of companies that are performing well typically meet more frequently compared with the opposite group. For instance, pharma companies Cipla, Lupin and Sun Pharma have witnessed a gradual decline in the number of their board meetings over the past five years as industry headwinds pressed along. The board of Indiabulls Housing Finance met nine times five years ago, but only five times in FY19. Likewise, Piramal Enterprises had eight board meetings in FY18, but that dropped to five in FY19. Housing finance business has come under pressure in the recent years.

Ten of the BSE 100 companies have conducted only four meetings in FY19 - the minimum needed to comply with the Companies Act 2013. Most companies on this list, such as Godrej Consumer Products, Page Industries, Lupin, Hero MotoCorp, Bharat Forge and JSW Steel, have been under performing in the past couple of years. To be sure, the median frequency of board meetings in India Inc is akin to that in the US. As per the Spencer Stuart 2018 S&P 500 Board Index, the median number of board meetings was seven for the year ended May 2018. A majority of S&P 500 company boards met on an average of six-nine times annually.