38 out of the Nifty 100 companies had the same person operating as both Chairperson and Managing Director / CEO in FY24, a scenario that can interfere with sound corporate governance, data from a new report shows.

The Chairperson heads the Board, and the MD is the Chief Executive of the company combining these two roles runs counter to basic governance principles as the management, headed by the MD is answerable to the Board, the 5th edition of the Survey on Corporate Governance by Excellence Enablers, notes.

In FY22, 40 per cent of companies did not separate the two positions. Over 70 per cent of these companies were PSEs.

The report, which analysed the annual reports and exchange filings of Nifty100 firms, also found that companies appear to be slowing down with Corporate Social Responsibility (CSR) spending. Around one-fifth (22 companies) had not spent the amount intended for CSR in FY24, compared to 17 in FY23, 18 in FY22, and 11 in FY21. 

As per law, companies are required to spend at least two per cent of the average net profits made during the three preceding fiscal years, every year, and the unspent amount is required to be transferred to a separate account and spent in the following three years.

Similarly, while the reporting of cases under the Prevention of Sexual Harassment regulations is rising, the manner of disposing of them remains unclear. “In FY21, FY22 and FY23, 27, 29 and 23 companies respectively had reported receiving zero complaints. The absence of complaints would seem to indicate either an ideal workplace or the lack of confidence among employees in reporting cases of this nature,” the report says.

The reporting on risks, especially those of cybersecurity, also remains suboptimal. During FY24, only 5 of the Nifty100 companies reported cyber security incidents or breaches, and of these, only one company gave details of the breach. In a positive sign to managing risks, over 40 of the Nifty100 companies have disclosed the presence of a Chief Risk Officer across all four fiscal years surveyed with 58 companies having CROs in FY24.