Board Training - Something more to learn

Last year I wrote an article titled “Board Training - Nothing more to learn”, the article reflected my thoughts on the dismal state of affairs of board training by most listed companies based on the 2015 Annual Reports.The emphasis of matter on Board Training in India was far from reality. Hardly a few listed companies took this initiative by SEBI seriously and one reporting was by Kotak Mahindra Bank with one director involved in this training process.  It was a dismal show by India inc. last year on Board Training.

In 2016 the initiatives on Board Training has progressed well and analysis of some of the annual reports of listed companies clearly point to better training program and reporting by corporates.It was a better year for Board Training, with more stringent directives recommended by SEBI on disclosure of the details of the program and the hours of training that each director attended, corporatesin India have improved their performance.

An analysis of the disclosure made by companies regarding Board Training in the Annual Report for March 31, 2016 shows a few LISTED companies which are professional management, family run companies, internal CEO, external CEO who run and manage these companies have improved from last year on reporting and practices, even though a lot needs to be done in this area by others. Some of the Companies that have done well in reporting on Board Training are CIPLA, Sun Pharma, Canfin Homes and their disclosure is in line with SEBI (Listing Obligations and Disclosure Requirement) 2014.

Why Board Training

Training is mandatory for directors and in India every director of a listed company is required to undergo training in a financial year and the same is required to be reported in the annual report.

Where to report about Board Training

Companies Act, 2013

As per Schedule IV clause (III)(1), the independent directors shall undertake appropriate induction and regularly update and refresh their skills, knowledge and Familiarity with the company.

Securities Exchange Board Of India (Listing Obligations And Disclosure Requirements) Regulations, 2015 (LODR)

As per Chapter II, clause 4(2)(f)(iii)(4), the board of directors shall encourage continuing directors training to ensure that the members of board of directors are kept up to date.

As per Chapter IV, clause 25(7), the listed entity shall familiarize the independent directors through various programmes about the listed entity, including the following:

• Nature of the industry in which the listed entity operates;
• Business model of the listed entity;
• Roles, rights, responsibilities of independent directors; and
• Any other relevant information.

New Provision in LODR

As per Chapter IV, clause 46(2)(i), The listed entity shall disseminate the following information on its website: details of familiarization programmes imparted to independent directors including the following details:

• number of programmes attended by independent directors (during the year and on a cumulative basis till date),
• number of hours spent by independent directors in such programmes (during the year and on cumulative basis till date), and
• other relevant details

Reporting Requirement

In India, it is mandatory to report the various programs undertaken by directors for familiarization and continuous development as per Chapter IV of LODR, Clause 46(2)(i), the details of such familiarization programmes shall be disclosed on the company's website. As per Schedule V of LODR under clause C(2)(g), the Board of directors shall disclose in the Corporate Governance Report section in the Annual Report, web link where details of familiarization programmes imparted to independent directors is disclosed.