Capital markets regulator Securities and Exchange Board of India (Sebi) is seeking to undertake a large-scale capacity-building initiative for independent directors to further improve corporate governance in the country, Chairman Tuhin Kanta Pandey said on Monday, signalling a shift in focus from regulatory frameworks to improving the effectiveness of boardroom decision-making.

Speaking at an industry forum, Pandey said the regulator will work on a joint initiative aimed at strengthening the capabilities of independent directors at scale, with the objective of enhancing overall corporate governance standards.

“Sebi will seek to embark on a joint initiative for capacity building of independent directors at scale with a view to further improve corporate governance,” Pandey said while speaking at a CII event.

Pandey revealed the plan at a time when Indian markets are navigating heightened global uncertainties and increasing investor participation, placing greater responsibility on boards.

“As we look ahead, our objective has been and will continue to be to create a governance framework that is robust enough to protect investor interests, flexible enough to enable business, and adaptive enough to respond to changing realities,” the Sebi chief said, highlighting that the effectiveness of governance “ultimately” depends on how the frameworks are internalised and implemented within organisations.

“If the first phase of governance reform was about building structures, and the second phase was about strengthening processes, then the next phase must be about building capability,” Pandey said.

Pandey said the regulator has built a robust skeletal structure of governance, but added that the question now is how strong the system is that enables the structure to function effectively. Pandey highlighted that the next phase of governance reform will not be about adding more rules, but about improving the quality of engagement within boardrooms. Independent directors, who are expected to safeguard minority shareholder interests and provide oversight, often operate with limited visibility and rely heavily on management inputs, making their role both critical and complex.

To address this, Sebi’s proposed initiative will focus on continuous and structured learning rather than one-time training. Key areas include domain-specific orientation, peer learning platforms, ongoing updates on emerging risks such as technology and sustainability, and the creation of knowledge networks to share best practices.

The regulator also underscored the need for boards to move beyond compliance-driven discussions to more value-oriented deliberations, including deeper analysis of risks, strategy and long-term sustainability.

(Disclaimer: The recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times.)

Markets regulator Sebi chairman Tuhin Kanta Pandey on Wednesday called on public interest directors (PIDs) to ensure that the “public interest” perspective remains central to all key decisions taken by the governing boards of market infrastructure institutions (MIIs).

Speaking at the Public Interest Directors Conclave 2025, Pandey emphasised that MIIs must ensure all interventions made by PIDs during board meetings are appropriately recorded.

Describing PIDs as “custodians of trust” within the MII ecosystem, he said, “Your role is fiduciary, moral, and institutional. You are not there merely to tick a compliance checkbox”.

The Sebi chief urged PIDs to exercise their independence while assessing the adequacy of financial and human resources for functions falling under verticals 1 and 2. He advised them to hold separate meetings without management or key managerial personnel (KMPs) to discuss critical governance and operational issues.

Under Sebi’s framework, vertical 1 covers critical operations, while vertical 2 relates to regulatory, compliance, risk management, and investor grievance functions.

Pandey also called on PIDs to bring independent judgment to board deliberations and proactively highlight any risks they identify. “Reinforce the checks and balances that strengthen your institution’s governance culture,” he said.As the markets grow, the role of PIDs will become even more challenging. The Sebi chief urged PIDs to “balance the legitimate expectations of shareholders with the non-negotiable public purpose of your institution. For this, you have to ensure that ethical governance is deeply embedded into the very DNA of your MII”.He further emphasised the need for PIDs to ensure that MIIs have robust internal controls, standard operating procedures (SOPs), and documentation to manage technology risks. Such frameworks, he said, could be developed in consultation with the Industry Standards Forum to ensure uniformity across MIIs.

Highlighting Sebi’s efforts to empower PIDs, Pandey said the regulator has already implemented several measures to ease appointment and operational processes. For instance, the mandatory cooling-off period for a PID moving from one MII to another competing MII has been removed, leaving the decision to the discretion of individual MIIs.

In addition, Sebi has introduced skill evaluation metrics for assessing applications for the appointment or reappointment of PIDs.

That, according to corporate-governance veteran Nell Minow, is almost unheard-of in the C-suite.

“That is really unusual,” she told Fortune. “I think that’s actually a badge of success for corporate governance, because that’s something investors have been concerned about for a long time: CEOs being dismissed and somehow getting to stay on.”

Nestlé confirmed to Fortune that Freixe will not receive a severance package. 

For years, high-profile executives who crossed ethical lines have left with multimillion-dollar parachutes. Famously, Steve Easterbrook, the former chief executive of McDonald’s, walked away from the role with a hefty sum of $40 million after getting caught having a consensual relationship with a subordinate. McDonald’s later clawed back $105 million from Easterbrook after finding he hadn’t disclosed sexual relationships with other subordinates at the fast food giant.  

Adam Neumann—after leading a disastrous charge to take the company he founded, WeWork, public—received $445 million in a payout package during his ouster. And after 346 people died in two crashes during Dennis Muilenburg’s tenure as Boeing CEO, he was not awarded severance but still left with more than $60 million in stock options. 

Minow said these different outcomes show that boards are not always consistent in how they police misconduct, but that one thing remains the same: Social media has left directors with fewer options to look the other way. 

“There has been bad behavior in the boardroom for a long time,” Minow said. “But partly because of social media, partly because of the way things get out, the board is under more pressure to respond.”

The reputational fallout from bad behavior can be brutal. A Polish CEO who was recently caught on video snatching a U.S. Open souvenir hat from a child watched his company’s online reviews collapse to near zero in days. The “John” of Papa John’s caused Major League Baseball to pull its promotion with the pizza chain after he used the N-word during a media-training call in 2018. 

Boards are slowly adapting, Minow argued. Some have begun docking bonuses or moving faster to terminate CEOs “for cause,” meaning the executive in question committed serious misconduct that warrants dismissal without severance pay. But she warned many still demonstrate  a double standard. 

“If you see some hypocrisy in the board, by the way that they handle the CEO versus the way they handle a middle manager, that’s a green light for employees to behave badly themselves.”

Even the apology, she said, operates as a test of governance. Minow keeps what she calls an informal “hall of shame” of poor executive apologies. The worst, she explained, dodge responsibility or fail to show how the company will prevent a repeat. The best are blunt, swift, and backed by action.

Ultimately, Nestlé’s move may prove a turning point. By denying Freixe a golden parachute, the Swiss food giant signaled that boards are starting to treat reputational risk as seriously as financial risk, and that missteps at the top no longer guarantee a cushy landing.

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Shares of Religare Enterprises went up by 2.8% on the BSE to their day’s high of Rs 241.70 on the BSE on Tuesday after the company appointed Trilegal and Grant Thornton Bharat LLP to conduct a governance review, assessing past operational practices and potential misconduct involving current and former employees.

In a stock exchange filing, the company said the review will cover Religare Enterprises Ltd (REL) and its subsidiaries—Religare Finvest and Religare Housing Development Finance Corporation. The assessment aims to identify any irregularities, recommend system improvements, and strengthen internal controls.

The board has also decided to seek immediate funding support from its new promoters, the Burman Group, to address an expected cash flow shortfall.

“The Board has reviewed the company’s fund flow position and identified a cash flow gap in the coming months. After evaluating various options, it has unanimously decided to approach the new promoters, the Burman Group, for immediate financial support,” REL stated in its exchange filing.

The Burman family, which controls Dabur, formally became REL’s promoters in February following an 18-month legal battle with the Rashmi Saluja-led board. In a shareholder vote, 97.5% of investors backed Saluja’s removal, leading to her exit. Subsequently, on February 26, REL’s board directed its subsidiaries to remove Rashmi Saluja and Rakesh Asthana from their respective positions.

Shares of Religare Enterprises have gained 9.59% over the past year but declined 22.32% in the last three months.Also read: Vedanta demerger: Newly demerged cos have potential to grow into $100 bn each: Anil Agarwal

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

Religare Enterprises’ (REL) board of directors has decided to approach the company’s new promoters — the Burman Group — for immediate funding support to sustain its operations following a review of its cash flow position. The board has observed a cash flow gap over the next few months, a company filing on Monday revealed.

“To address the funding requirements, the board has recommended a short term Inter Corporate Loan (ICL) from the Promoter Group or its Associate Entities in the interim shall be best suited given the tight timeline for the requirement,” the company statement said.

The company’s board has commissioned a governance review of REL and its subsidiaries viz. Religare Finvest Limited (RFL) and Religare Housing Development Finance Corporation Limited (RHDFCL), the company filing said.

“The objective is to review the past operating practices, suggest improvements around systems & controls for future implementation and to identify any potential instances of misconduct by certain current and/or ex-employees of the aforementioned companies. For conducting this review, the Board of Directors have resolved to engage a law firm M/s Trilegal who would be assisted by M/s Grant Thornton Bharat LLP,” the filing said.

Shares of Religare today ended at Rs 235.20 on the NSE, falling by Rs 7.25 or 2.99% from the Thursday closing price.

The Burman family that runs Dabur took the reins of REL after an 18-month-long legal battle. They are the new promoters of the Delhi-based financial services company.Following the transfer of control, ET had reported about the expectations from the Burmans for the infusion of funds into the firm along with the appointment of a new management team to turn Religare into a competitive non-banking financial company (NBFC).”The Burman family is likely to infuse Rs 2,000 crore- the funds initially earmarked for the open offer-by subscribing to preferential shares, thereby increasing their stake to over 50%,” sources said. The new promoters are also expected to undertake a rebranding exercise, which may include renaming the company and its subsidiaries in the coming months to align with the Burmans’ strategic vision, said the people cited above.

Read more: With Burman’s in the driving seat, fresh funds and a new name on cards for Religare

The conflict between Religare’s management and the Burman family has significantly impacted the company’s affairs. After seven consecutive quarters of profitability since March 2023, the company reported a ₹63 crore loss in the quarter ended December 2024.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

Sebi on Friday came out with guidelines to strengthen accountability and improve governance of stock exchanges and other market infrastructure institutions (MIIs) by asking them to resolve whistleblower complaints within 60 days of receipt. Additionally, Sebi asked MIIs, comprising stock exchanges, clearing corporations and depositories, to adopt RegTech (regulatory technologies) and SupTech (supervision technologies) for better regulatory and supervisory mechanisms.

Also, the regulator outlined guidelines for back office vendors, public interest directors (PIDs) meetings, establishing a standard operating procedure for disciplinary actions against Key Management Personnel (KMPs), disclosure of board meeting agendas and minutes, quarterly reporting by the Compliance Officer and half-yearly reporting by the Chief Risk Officer.

The new guidelines will become effective from April 1, the Securities and Exchange Board of India (Sebi) said in its circular.

On whistleblower policy, Sebi asked MIIs to resolve whistleblower complaints within 60 days of receipt.

The regulator has specified the role of the audit committee in overseeing whistleblower complaints. It is tasked with receiving and investigating such complaints and making appropriate decisions, including recommending further actions when necessary.

The committee is required to submit a detailed quarterly report to the MII’s Governing Board, outlining the complaints received, the actions taken, and any unresolved issues. If a decision cannot be reached on a particular matter, it must escalate the issue to the Governing Board for resolution. With regards to RegTech and SupTech, Sebi asked MIIs to implement systems enabling members or participants, such as stock brokers, clearing members, and depository participants, to make submissions online, reducing reliance on physical documentation. These systems should generate alerts and reports to support regulatory objectives.

Also, MIIs are required to disclose key information about their members or participants on their websites, including details of investor grievances (resolved and pending) for the last three financial years, regulatory actions taken, net worth as of the previous financial year, and other relevant data.

Additionally, any significant regulatory non-compliance by a member must be shared with other MIIs to ensure transparency and accountability.

To ensure regulatory compliance by back-office vendors or outsourced agencies appointed by MIIs and their members or participants, MIIs must establish policies for their appointment and monitoring.

These policies should clearly identify potential risks associated with such vendors or agencies and outline measures to mitigate them.

Additionally, the policies must define minimum standards or thresholds, both qualitative and quantitative that vendors must meet to qualify for appointment, including standards for technology vendors.

To enhance accountability within MIIs, Sebi asked public Interest Directors (PIDs) to meet at least once every six months, with mandatory attendance from all members.

These meetings focus on reviewing compliance with Sebi regulations, assessing the functioning of critical areas, such as operations, regulatory compliance, risk management, and investor grievances, and evaluating the adequacy of financial and human resources for these functions.

Additionally, PIDs are required to identify potential conflicts of interest and address issues with significant market impacts.

Sebi asked MIIs to frame internal Standard Operating Procedures (SOPs) for undertaking disciplinary actions against KMPs or any non-compliance with regulatory provisions and internal guidelines. The policy should be approved by the Nomination and Remuneration Committee (NRC) and the Governing Board of the MII.

The SOP include a list of actions that may be initiated against a KMP for breach of any provision, including advisory, warning, impact on annual increment or promotion, suspension and termination.

Compliance Officers are required to report non-compliance and investor grievance redressal quarterly. These reports are required to be submitted to Sebi within 45 days of the quarter’s end.

Besides, Chief Risk Officers have been asked to submit reports on overall risk management on half yearly basis, and the report needs to be submitted to the regulator within 90 days of the half-year’s end.

Sebi has directed MIIs to disclose regulatory, compliance, risk management, and investor grievance-related agendas and minutes on their websites.

The group attack began weeks ago, in early May, with Proposal 118, which called for transferring 5% of COMP’s treasury to a multi-sig wallet controlled by the Golden Boys, which did not pass because community members highlighted suspicious circumstances around its introduction.

Sen. Elizabeth Warren, D-Mass., once again urged the U.S. Securities and Exchange Commission to investigate Tesla, CEO Elon Musk and the company’s board of directors over what she called, “possible misappropriation of Tesla resources and conflicts of interest arising from Mr. Musk’s dual role at Tesla and X— renamed from Twitter.”

Warren, who sits on both the Senate’s banking and the armed services committees, had sent a similar request to the SEC last July, and a letter to Tesla’s board chair Robyn Denholm expressing similar concerns in the past.

In a six-page letter dated March 21, Warren flagged new worries to the federal agency, writing that recent evidence suggests, “Tesla’s Board lacks independence from Mr. Musk, who uses his control over the Board for his personal benefits, rather than in the best interest of Tesla’s shareholders.”

Warren’s letter refers to a Delaware Chancery court ruling in January this year in which the judge, Kathaleen McCormick, found that Elon Musk controlled Tesla and its board had “breached their fiduciary duties when awarding Musk an ‘unfathomable’ equity compensation plan worth $55.8 billion.”

Tesla’s share price has declined around 30% year to date, Warren noted.

“Mr. Musk’s recent public statements and actions have raised fresh concerns about conflicts of interest, the redirection of Tesla’s resources to Mr. Musk’s private companies,” she wrote, referring to Musk’s demand for 25% of voting power over Tesla, his wish to move Tesla’s incorporation site to Texas, and his threat to develop artificial intelligence products elsewhere if he doesn’t get that control, among other things.

Tesla’s investor relations VP Martin Viecha and VP of Public Policy and Business Development, Rohan Patel, did not respond to requests for comment. Tesla does not maintain a traditional public relations team in North America.

Musk, who is CEO of Tesla and defense contractor SpaceX, as well as chief technology officer and owner of X, and founder of xAI, Neuralink and The Boring Co., posted a comment about Warren to his social media platform in response to the senator’s letter.

Musk said: “Senator Karen’s main economic & tax advisor is SBF’s Dad. I suspect some of this is coming from him.” Musk has called Warren “Senator Karen” in previous posts.

Musk was alluding to Sam Bankman-Fried, or SBF, who was convicted in 2023 of seven criminal counts against him in relation to the 2022 collapse of his crypto company FTX and sister hedge fund Alameda Research.

SBF’s father, Stanford legal scholar Joseph Bankman, signed a letter in support of her 2016 proposed legislation aimed at simplifying the U.S. tax code and reportedly advised her on the legislation.

A spokesperson for Warren’s office confirmed that Bankman had no involvement.

A spokesperson for the SEC told CNBC via e-mail on Thursday that the agency’s Chair Gary Gensler “will respond to Members of Congress directly,” rather than via public or press statements.

Musk and the SEC have already clashed repeatedly through the years. The federal financial regulators charged Musk with civil securities fraud after he tweeted in 2018 that he was exploring a take-private deal for Tesla at $420 per share and had “funding secured” to do so. Musk’s tweets caused a halt in trading of Tesla shares and sent the company’s share price seesawing for weeks.

The SEC is now investigating whether Musk, or anyone else, committed securities fraud in 2022 as he began buying up stock in Twitter ahead of his leveraged buyout of the company. Musk was late to file a required disclosure about his initial investment in Twitter, before he took the company private and rebranded it as X Corp.

Another probe of Tesla and Musk would add to the tensions between the agency and one of the world’s richest people on paper.

On Thursday, Tesla shares closed down by a point for the day at $172.82, but were ticking slightly higher after hours.

Read Sen. Warren’s full letter to the SEC.

Since December a spate of crypto finance projects in the Solana blockchain ecosystem have released tokens in attempts to “decentralize” their governance. Holders of these tokens get to vote on the directions of their protocols. Oftentimes those who have used the protocol heavily – by, say, trading hundreds of NFTS – get bigger allocations of the token.

Environmental, social, and governance (ESG) investing is a form of sustainable investing that considers a company’s performance and impact on various ESG criteria, such as climate change, diversity, human rights, corporate governance, and more. ESG investors aim to align their investment choices with their personal values and social goals, as well as to avoid companies that may pose reputational or regulatory risks.

But does investing in ESG portfolios affect the financial returns and risks of investors? Is there a trade-off between pursuing sustainability and profitability? In this article, we will review some of the recent research and evidence on this topic and explore the implications for investors.

The Relationship Between ESG and Corporate Financial Performance
One of the main questions that ESG investors face is whether incorporating ESG criteria into their investment decisions will result in lower or higher returns than investing in traditional portfolios. To answer this question, researchers have examined the relationship between ESG performance and corporate financial performance (CFP) using various measures such as stock returns, profitability, valuation, and risk.

The relationship between ESG and corporate financial performance can be analyzed from different perspectives:

Risk Management: Strong ESG practices can help companies identify and mitigate various risks. For example, a company that actively manages its environmental impact may avoid regulatory fines or reputational damage. A robust governance structure can prevent scandals and ethical breaches, which could otherwise lead to significant financial losses.

Cost Reduction: Sustainable practices, such as energy efficiency and waste reduction, can lead to cost savings. Companies that prioritize employee welfare and well-being might experience lower employee turnover and attract top talent, which can ultimately enhance productivity and reduce recruitment and training costs.

Revenues and Market Opportunities: Embracing sustainable practices can open new market opportunities, especially as consumers and investors increasingly prefer environmentally and socially responsible companies. Businesses that cater to this demand can experience increased sales and revenue growth.

Access to Capital and Cost of Capital: Many investors now consider ESG factors when making investment decisions. Companies with strong ESG performance may find it easier to access capital from socially responsible investors and may benefit from lower borrowing costs due to reduced risks.

Long-Term Resilience: Integrating ESG factors into corporate strategies can contribute to the long-term resilience of companies, ensuring they can adapt to changing market dynamics and evolving stakeholder expectations.

However, it’s essential to note that the relationship between ESG and financial performance is complex and context-specific. While numerous studies suggest a positive correlation between strong ESG practices and financial performance, the causal link can be challenging to establish definitively. Additionally, the impact of ESG factors on financial performance may vary across different industries, regions, and time frames.

The Performance of ESG Funds Compared to Traditional Funds
Another way to assess the impact of ESG investing on returns and risks is to compare the performance of ESG funds to traditional funds. ESG funds are mutual funds or exchange-traded funds (ETFs) that apply ESG criteria to select or exclude investments from their portfolios. They may also engage with companies to influence their ESG practices or advocate for policy changes.

A recent study by Morgan Stanley (2019) analysed the performance of nearly 11,000 mutual funds from 2004 to 2018 using Morningstar data. The authors found that there was no consistent and statistically significant difference in total returns between sustainable funds and traditional funds. However, they also found that sustainable funds experienced a 20% smaller downside deviation than traditional funds, meaning that they had lower volatility and downside risk.

Studies like these indicate that investing in ESG funds does not entail a trade-off in terms of returns and may even offer some advantages in terms of risk reduction and stability. They also suggest that ESG factors can help investors identify companies that are better prepared to cope with environmental and social challenges and opportunities.

Conclusion
ESG investing is not only a way to express one’s values and preferences but also a way to enhance one’s portfolio performance and risk management. The evidence from academic research and industry reports shows that there is no trade-off between investing in ESG portfolios and achieving competitive returns. On the contrary, ESG investing may offer some benefits in terms of lower volatility, higher resilience, and better alignment with long-term trends.

However, ESG investing is not a one-size-fits-all approach. Investors should consider their own objectives, preferences, and risk tolerance when choosing an ESG strategy. They should also be aware of the challenges and limitations of ESG data, ratings, and methodologies, which may vary across providers and sources. Finally, they should keep in mind that ESG investing is not a substitute for fundamental analysis, diversification, and due diligence but rather a complement to them.

(The author of the article is Mr. Sidhavelayutham M, Founder & CEO, Alice Blue)
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)