A large number of companies also believes that there is significant scope for improvement in clause 49 regulations, which is monitored by market regulator the Securities and Exchange Board of India (Sebi) for all listed companies.
Clause 49 of Sebi's Listing Agreement requires every listed entity to reserve half the board for independent directors if the chairman is an executive director.
While 73 per cent of the respondents believe risk management practices need to be improved, 85 per cent of the respondents think the remuneration of CEO should be significantly linked to company performance and involve a medium term lock-in option.
A significant majority would also prefer greater empowerment to independent directors.
KPMG had conducted a poll of about 100 chief executive officers (CEOs), chief financial officers (CFOs), independent directors and similar leaders, who were asked about the journey, experience and the outlook for corporate governance in India.
The respondents are predominantly from private equity firms, financial services and the manufacturing sector. The poll was conducted between November 2008 to January 2009.
A majority of the respondents feel that independent directors do not adequately challenge the executive directors and management in the process of discharging their governance responsibilities. Seventy two per cent of the respondents believe an independent and transparent process to evaluate the performance of board members can improve corporate governance.
So long as we continue to have a process wherein independent director appointments are largely driven by promoters, empowerment of independent directors and protecting minority shareholder interests will continue to be areas of concern, according to Richard Rekhy, CEO and Head of advisory services of KPMG in India.
Thirty five per cent of respondents consider weak oversight and monitoring as the biggest risk to corporate governance.
