The Securities and Exchange Board of India Committee on Corporate Governance, chaired by Uday Kotak, Managing Director, Korak Mahindra Bank Limited, was formed in June 2017 to address gaps in the governance practices of listed companies in India. Members included Madhukar Gupta (Additional Secretary, Department of Public Enterprises, Ministry of Heavy Industries and Public Enterprises); Praveen Garg (Joint Secretary (Financial Markets), Department of Economic Affairs, Ministry of Finance); Amardeep Singh Bhatia (Joint Secretary, Ministry of Corporate Affairs); Keki Mistry (Vice Chairman & Chief Executive Officer, Housing Development Finance Corporation Limited); Rishad Premji (Chief Strategic Officer and Member of the Board, Wipro Limited); Shankar Raman (Whole Time Director and CFO, Larsen & Toubro Limited); Nilesh Shivji Vikamsey (President, The Institute of Chartered Accountants of India (ICAI)); Mahavir Lunawat (Chairman, Financial Services Committee and Council Member, The Institute of Company Secretaries of India (ICSI)); Ashish Kumar Chauhan (MD & CEO, Bombay Stock Exchange (BSE)); J Ravichandran (Group President, National Stock Exchange of India Ltd (NSE)); Zia Mody (Managing Partner, AZB & Partners); Cyril Shroff (Managing Partner, Cyril Amarchand Mangaldas); Joydeep Sengupta (Senior Partner and Leader of Asia Pacific Banking Practice, McKinsey & Company); Shobhna Kamineni (President, Confederation of Indian Industry (CII)); Pankaj R. Patel (President, Federation of Indian Chambers of Commerce & Industry (FICCI)); J. N. Gupta (Managing Director, Stakeholders Empowerment Services (SES)); Amit Tandon (Managing Director, Institutional Investor Advisory Services (IIAS)); M. Venkataraman (Managing Partner & CEO, Deloitte India); Arun K. Kumar (Chairman & CEO, KPMG India); Vasanthi Srinivasan (Professor, IIM Bangalore); Krishnamurthy Subramanian (Associate Professor of Finance, Indian School of Business); and U. D. Choubey (Director General, Standing Conference of Public Enterprises (SCOPE)).

The committee’s mandate included ensuring the independence of directors, strengthening related-party transaction disclosures, improving board evaluation practices, and enhancing transparency in financial disclosures. The committee submitted its report after four months of deliberation, addressing critical issues related to corporate governance that had previously been highlighted in reforms initiated by earlier committees, such as those led by Kumar Mangalam Birla and Narayana Murthy. Despite past improvements, the committee observed that governance in Indian firms still required substantial reforms, particularly in board composition, independence of key personnel, and transparency in corporate dealings.

One of the key findings was the need for stronger boards with enhanced diversity and independence. The committee recommended that all listed companies have a minimum of six directors and include at least one independent female director. To safeguard minority shareholders, the committee called for an increase in the number of independent directors to at least half of the total directors. It also proposed that independent directors meet more rigorous eligibility criteria to reduce conflicts of interest and prevent board interlocks. Board interlocks, where individuals serve on multiple boards, were identified as a risk to independence and accountability, as they can create overlapping loyalties and conflicts of interest that compromise objective decision-making. Moreover, the committee advocated separating the roles of the chair and CEO in companies in which public shareholding exceeds 40 percent, to strengthen board independence and oversight.

In addition to board-related reforms, the committee focused on improving disclosures and transparency. It recommended that companies disclose related-party transactions more comprehensively and provide clearer insights into their financial and operational health. Specific recommendations were made to enhance audit practices, such as improving disclosure of audit qualifications of the financial reports, ensuring auditor independence, and monitoring auditor resignations more closely. The committee also addressed governance issues in public sector enterprises, suggesting that they adopt stronger governance frameworks to align with private sector standards and restore investor confidence. By proposing phased implementation timelines, the committee emphasized gradual but disciplined execution of these recommendations to ensure companies adapt to the changes effectively.

The Securities and Exchange Board of India accepted several key recommendations of the Kotak Committee. These include mandating a minimum of six directors for listed companies and requiring at least one independent female director on boards by April 2020. The quorum for board meetings was set to one-third of total directors, with at least one independent director. The Securities and Exchange Board of India enforced the separation of the roles of chair and CEO, limited directorships to seven, and disallowed independent directors from being part of the promoter group. The Kotak Committee’s recommendations aimed to enhance corporate governance by strengthening board structures, improving transparency, and addressing conflicts of interest, laying the groundwork for a more accountable and investor-friendly framework for Indian listed companies.