Market regulator Securities and Exchange Board of India’s (Sebi’s) diktat for independent directors to justify IPO pricing may put them in a tight spot.
The move shall require them to upskill or depend on third-party agencies. The latest move by Sebi is one of the many regulatory changes that have increased accountability and put additional responsibilities on independent directors, who are said to be representatives of minority investors.
According to experts, many independent directors on company boards come from various non-financial domains of expertise. Sebi’s move may deter them from taking such positions in certain cases as they may not be equipped or have the expertise to arrive at IPO pricing, governance experts said.