Coforge Board Row: What the Independent Director Crisis Reveals About Corporate Governance
The Coforge board controversy has raised wider questions about independent directors and corporate governance. (Image Coforge on X)
By P. SESH KUMAR
The Coforge controversy exposes deeper questions over board evaluation, independent directors, shareholder power and accountability in promoter-less companies.
New Delhi, September 12, 2026 —Independent directors are the minority shareholder’s delegates in a room otherwise filled with management and large investors. The Code for Independent Directors in Schedule IV asks them to bring objective judgment, to keep themselves well informed, to insist on adequate deliberation and to safeguard the interests of all stakeholders, above all minority shareholders; section 166 binds every director to act in good faith and to avoid situations of conflict with the company’s interest. Their characteristic failure is not greed but good manners: the reluctance to ask a distinguished colleague for the paper when he has kindly offered a summary.
The two big words: governance and accountability. Corporate governance, reduced to one sentence, is the set of arrangements that ensures those who run a company with other people’s money can be seen, questioned and replaced. Accountability is the part that bites: the duty to render an account and the real possibility of consequence. Board evaluation is the one mechanism by which a board holds itself to account.
When it is captured by the person it is meant to assess, governance does not merely weaken; it inverts, becoming a machine for manufacturing the appearance of scrutiny.
The Charge-Sheet: Specific Lapses and the Rules They Strain
What follows is a prima facie reading of the company’s own disclosures, not a verdict of guilt. Bhatt disputes the framing, Singh offers a different account of the board’s temperature, and the company says its review is continuing.
First, the evaluated held the pen. The chairman, on the company’s account, decided who could see the reports that assessed his own performance. The law removes the evaluated director from his own evaluation; it cannot be read to allow him to decide what his evaluators are permitted to see.
That strains the proviso to Regulation 17(10) and paragraph VIII(1) of Schedule IV in spirit if not in letter, and it sits squarely within the conflict that section 166(4) tells every director to avoid.
Second, a recommendation without its premise. The committee that recommended Bhatt’s five-year extension was understood to have been chaired by Singh and counted Bhatt himself as a member. Part D of Schedule II requires such a recommendation to rest on the report of performance evaluation; if the committee never saw the chairman’s lowest rating, its recommendation stood on a foundation with the keystone missing.
Two questions follow that only the minutes can answer: whether Bhatt recused himself from deliberations on his own reappointment, and how the Advent nominee who now sits on the committee, Shweta Jalan, voted if she was present when it made its recommendation, given that Advent later voted against it.
Third, a board kept in the dark. Regulation 4(2)(f)(ii) lists monitoring and reviewing the board evaluation framework among the board’s key functions. A board that receives an oral précis in place of the reports cannot discharge that function. There is a sharper irony in Regulation 25: one of the independent directors’ own statutory tasks is to assess whether information reaches them in adequate quantity, quality and time. On this occasion it did not, and nobody seems to have said so until an auditor did.
Fourth, the silent separate meeting. Regulation 25 also requires the independent directors, meeting on their own, to review the chairperson’s performance. If that meeting was held for the year, as the law requires, one of two things is true: either the chairman’s rating was never put before it, or it was put and the directors let it pass. Both are failures of the independent collective, and that collective includes the directors who have since rebuked Singh.
Fifth, shareholders voting on a cracked premise. Section 102 requires the explanatory statement for every special resolution to set out the material facts. The statement placed before the 24 August meeting rested on a committee recommendation that, on the company’s later account, had not been informed by the full evaluation.
If the single-source report that KPMG raised the alarm in early August is accurate, the board knew before the meeting that the premise of its own recommendation was cracked; nothing public indicates that shareholders were told before they voted. The same report says key investors confronted Bhatt with the findings before the market learned of them, which would engage the equitable-treatment and timely-disclosure principles of Regulation 4 and the long-running grey zone of what nominee directors may pass to their sponsors. Both points await confirmation.
Sixth, disclosure by instalments. The 9 September filing spoke only of certain material information not fully disclosed; the particulars, including the lowest rating, emerged the following night after the share price had spoken.19,1 Regulation 30 favours the whole truth promptly over the truth in instalments.
In fairness, Coforge has now disclosed more about a board evaluation than almost any Indian company ever has, in a market where companies habitually shy away from publishing evaluation results at all. Both resignation letters, moreover, carry the detailed reasons and the confirmation that there are no other material reasons, as Schedule III requires.
Seventh, the annual report’s own statement. Section 134(3)(p) obliges the board’s report to describe how the annual evaluation was carried out. The 2025-26 report would have been prepared at a time when, on the company’s account, only two directors had seen the results. Whether its description survives the auditor’s findings is a question the company should answer in public rather than leave to inference.
The Case for the Defence: Steel-Manning Bhatt, Singh and the Sceptics
Confidentiality is the oil of candour. Candid peer assessment depends on the promise that individual ratings will not be sprayed around the boardroom. Many boards restrict individual scores to the chair and the committee chair and share only aggregated results with the rest, and SEBI’s guidance is framed around feedback to the person evaluated. Measured against common Indian practice, where evaluation outcomes are rarely disclosed even to shareholders, restricting circulation looks like convention rather than conspiracy.
The filing’s words are narrower than the headlines. The filing speaks of the chairman’s category receiving the lowest rating. That may describe the dimension of the questionnaire that assessed the chairing of the board rather than a league table in which Bhatt was the lowest-ranked director. The stronger version in circulation, that he received the lowest rating of any director, comes from unnamed sources relayed by a single outlet. A chairman reading a category score as institutional feedback, not a personal indictment, is not obviously acting in bad faith.
The hierarchy was turned upside down. An internal auditor is engaged and paid by the company and works under the supervision of the audit committee, alongside the management it routinely audits. Turning that instrument on the non-executive chairman, whose job is to oversee management, inverts the ordinary chain of accountability. IiAS’s evident surprise captures the unease. If internal audit can be pointed at an inconvenient chairman, it can be pointed at any independent director, and the reported review of recordings of board discussions, if accurate, would take auditors into the one room they are usually not invited to enter.
The calendar is suspiciously convenient. Advent arrived in April; the audit scope was set in April; Advent voted against Bhatt in August; the findings surfaced in September. InGovern’s Shriram Subramanian has argued that the company framed as a board-evaluation matter what was really a disagreement on strategy or policy between the chairman and the largest shareholder. Singh’s letter points the same way: the move from a private-equity-led board to a more independent one, he wrote, had bred tension between independent and executive directors, and new board members could shift direction on strategy, transparency and compensation. The mention of compensation is not idle, for the committee Singh chaired sets the pay of senior management. The company, for its part, insists the board has approved every major strategic move unanimously, from the Encora deal to the Sabre contract and the exits from AdvantageGo, the data-centre business and loss-making Indian government contracts.
The man and his record. Bhatt chaired the State Bank of India from 2006 to 2011, served as an independent director on the boards of Tata Steel and Hindustan Unilever, stepped in as interim chairman of Tata Steel after Cyrus Mistry’s removal in 2016, and was named by the Supreme Court in 2023 to the expert committee examining the Hindenburg allegations against the Adani group. He remains an independent director of Wockhardt and chairs Greenko Energy Holdings. Such a record proves nothing about this episode, but it counsels against the caricature of a chairman hiding his homework in the satchel.
The Verdict: Two Failures, Not One
If we give the defence every inch, three facts still stand. The first is that confidentiality protects a director from the world, not from his fellow directors. In law the board as a whole is the evaluator of independent directors; withholding the results from the evaluators is not discretion but disempowerment.
The second is that the nomination and remuneration committee’s statutory duty to ground an extension in the evaluation converts suppression from a lapse of etiquette into a defect of process, one that went to the root of a special resolution put to shareholders. The third is that, on the company’s account, the instruction to restrict the reports came from the one person whose own rating was at stake.
Even in perfect good faith, that conflict is structural and should have triggered recusal. On the failure of candour, primary responsibility rests with the chairman and the committee chair.
But the institution fails the independence test too. The other independent directors accepted an oral briefing without asking for the paper. The separate meeting of independents, if held, did not, perhaps, surface the chairman’s score.
The audit committee allowed internal audit to wander into boardroom conduct without any published mandate for doing so. And the whole revelation dovetailed neatly with the interests of a shareholder that had just voted the chairman down.
None of this excuses the concealment; all of it diminishes the board that is now sitting in judgment. Coforge suffered a failure of candour at the top and a failure of independence all round, and neither cancels the other.
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The Twenty-Per-Cent Veto: A Lesson for Promoter-less India
Here lies the deeper lesson, and it outlives the personalities. In a promoter-less company every special resolution needs three-quarters of the votes cast, and a block of about a fifth of the equity can, on ordinary turnouts, supply much or all of the quarter needed to sink one. Bhatt’s resolution failed at 65.4 per cent with Advent voting against. SEBI noticed the problem in 2022 and built a safety valve: where a special resolution to appoint an independent director fails, the appointment is deemed made if votes in favour exceed those against both overall and among public shareholders.
The valve, however, is widely read as covering first appointments only; re-appointment remains hostage to section 149(10) of the Act, which demands a special resolution, and to Regulation 17(1A) for directors past 75.
The consequence is perverse. An independent director’s second term, the point at which he knows the company best and ought to fear no one, depends on the goodwill of the largest shareholder, which in Coforge’s case sits just below the 25 per cent open-offer trigger of the Takeover Regulations and therefore exercises influence without any of a promoter’s obligations.
Independence with a renewal clause is independence on probation. The counter-argument deserves its due: large shareholders are precisely the engaged stewards governance reformers have long demanded, and declining to extend a 75-year-old chairman to the age of 81 is a defensible stewardship call, not a coup. The reform worth considering is therefore not to blunt the big holder’s vote but to illuminate it: extend the dual-majority safety valve to re-appointments, with matching amendment of section 149(10), and require significant holders to disclose, with reasons, how they vote on independent-director resolutions.
Accountability: What Should Happen Now
The company says the audit and governance review continues. It should end with a published summary of the internal auditor’s observations, the board’s conclusions and the responses of Bhatt and Singh, so that the market is not left to judge from one side’s filings. The evaluation for 2026-27 should be facilitated by an external agency with no other engagement with the company, and the chairperson’s appraisal should be led by a designated senior independent director. That is the British settlement, where FTSE 350 boards must have an externally facilitated review at least every three years and the chair is appraised by the non-executives under the senior independent director’s leadership. Individual results should go, un-redacted, to every director; minutes should record recusals whenever a committee member is the subject of the business; and the audit committee should publish the mandate under which internal audit reviewed board processes, including whether meeting recordings were accessed.
The vacancies created by two independent resignations must be filled at the earliest and in any case by the later of the next board meeting or three months, under Regulation 25(6), and the search now led by the interim chair should be seen to be independent of the largest shareholder.
The stock exchanges and SEBI, for their part, have a straightforward question to examine: whether the market received the material facts in time and all at once, and whether any shareholder received them earlier than others. Bhatt, who retains other directorships, has his own reputational ledger to settle, and the fairest place to do it is in a full public statement of his side of the account.
The Final Word
Board evaluation in India has long been a ritual of the most comfortable kind: questionnaires filled in by colleagues, scores aggregated into adjectives, a paragraph in the annual report assuring shareholders that everyone did splendidly. Coforge has, perhaps by accident, done the country a service by showing what happens when someone actually reads the report card, and how quickly a boardroom can combust once it is read.
The lesson is not that chairmen should be policed by internal auditors. It is that report cards should never need auditing before they can be read.
Coforge Board Crisis: How a Hidden Chairman Rating Triggered a Boardroom Shake-Up
(This is second of the two-part series. This is an opinion piece. Views are the author’s own.)
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