Stocks● Neutral
India Panel's Director Age Cut Draws Governance Warnings
A parliamentary panel backs cutting the managing director age floor to 18 from 21. Mint's editorial board says the governance risk argues for delay.
Continue with
A parliamentary panel recommended lowering the minimum age for managing directors and whole-time directors in India from 21 to 18. The recommendation is part of a report of more than 1,100 pages that the joint committee on the Companies (Amendment) Bill tabled in Parliament, and the committee reportedly reached consensus on the age change.
A possible rationale is widening the applicant pool for senior roles, Mint's editorial board said in a commentary, especially in family-owned and promoter-led businesses that groom successors early. The change would also bring India's rules closer to those in the US and Germany, where the threshold is lower or absent.
If the purpose of a board is better corporate governance, it is not clear how lowering the age of eligibility helps, the board argued. A board position cannot be taken lightly. Directors hold management accountable and maintain the policies and control mechanisms that act as a system of checks and balances.
The role presupposes a knowledge base spanning company governance, law, finance and risk exposure. It also presumes a grasp of the macro-economic scenario at home and abroad, which in today's context includes geopolitics and geo-economics, the board said.
The board was explicit that the objection is not about the capacity of 18-year-olds, or their maturity. Most countries have lowered voting ages for national elections, and India cut its threshold from 21 to 18 back in 1988. Nobody denies the importance of electing leaders, the board wrote.