India’s corporate governance regime has steadily evolved, especially for listed entities. Yet, one critical area that remains under-emphasized is the appointment of a permanent Chairperson on the Board of Directors. While global governance codes underscore the strategic importance of this role, many Indian companies continue to operate without one—undermining board effectiveness, continuity, and investor confidence.

A Chairperson is not merely a figurehead or procedural authority for convening meetings. Rather, the Chairperson is the custodian of the Board’s integrity and effectiveness. Their role is distinct from that of executive management and is centred on leading the Board, not the business. This distinction allows the Chairperson to serve as a balancing force between management’s operational focus and the Board’s oversight responsibilities.

The Chairperson is often the go-to person for directors—especially independent ones—for guidance and clarity. Their role becomes vital in resolving boardroom differences, engaging with stakeholders, and acting as a conduit between the Board and executive management.

Without a permanent Chairperson, boards lack consistency in direction and institutional memory. The Chair ensures that decisions are not taken in isolation, and that the Board’s oversight remains balanced, strategic, and forward-looking.

Key Functions of a Chairperson

The Chairperson plays a pivotal role in ensuring that the Board functions effectively, independently, and strategically. Their key responsibilities include:

• Leadership and Strategic Direction: Guiding the Board to remain aligned with the company’s long-term goals, regulatory responsibilities, and risk profile, while fostering open and balanced discussions.
• Agenda Setting: Defining and prioritizing key issues for Board and Committee meetings, including governance, compliance, ESG, succession, and strategy.
• Conducting Meetings: Ensuring meetings are efficient, inclusive, and outcome-driven. The Chair enables all directors to contribute meaningfully and manages differences constructively.
• Supporting Directors: Acting as a mentor, particularly for new or independent directors, and encouraging informed, cohesive Board engagement.
• Board Evaluation and Oversight: Leading Board assessments, identifying skill gaps, and ensuring the Board remains effective and future-ready.
• Bridge to Management: Serving as a key link between the Board and executive team—communicating direction, monitoring performance, and guiding CEO evaluation and succession.
• Stakeholder Interface: Representing the Board in engagements with investors, regulators, and other key stakeholders—enhancing the company’s governance profile.

A permanent Chairperson provides stability and strategic continuity. In contrast, rotational or ad hoc Chairs often lack the consistency and leadership required to guide a Board effectively.

Global Best Practices Support the Chairperson’s Role

Internationally, the importance of a permanent, non-executive Chairperson is well recognized:

• The UK Corporate Governance Code recommends separating the roles of Chairperson and CEO to avoid concentration of power.
• The OECD Principles of Corporate Governance emphasize the need for an effective Board led by a Chair who promotes independent oversight.
• The ASX Principles in Australia similarly advocate for an independent Chair wherever possible.

India’s Regulatory Landscape and SEBI’s Attempt

India has acknowledged this need. In 2018, SEBI amended the LODR Regulations to mandate the separation of the roles of Chairperson and Managing Director/CEO for the top 500 listed companies. The idea was to enhance Board independence by ensuring that the Chairperson was not related to executive leadership.

However, due to limited industry adoption and resistance, SEBI rolled back the requirement in 2022, making it voluntary. This shift may have diluted the reform’s impact, but the underlying principle remains relevant—good governance needs clear role separation and strategic Board leadership.

LODR Incentives for Companies with a Chairperson

SEBI’s LODR framework still incentivizes companies that appoint a non-executive, non-related Chairperson. If such a Chair is in place, only one-third of the Board is required to be independent directors. Where no such Chairperson exists, companies must have at least half the Board as independent. This compliance flexibility is a clear regulatory endorsement of the Chairperson’s role in maintaining Board independence.

Current Trends and Governance Gaps

Despite these incentives and imperative of the importance of permanent chairman, a large number of Indian listed companies—particularly in the mid-cap and promoter-driven segments—do not have a permanent Chairperson. Many rotate the role among directors or let the MD/CEO double as Chair, which can:

• Lead to blurred oversight lines;
• Weaken Boardroom objectivity;
• Reduce investor trust, especially among institutional and foreign stakeholders.

Companies with a non-executive or independent chairperson are better positioned to ensure checks and balances, support independent directors, and manage crises or transitions with greater stability. This is also evident by the fact that most of the large entities, like those falling in top 100 by market capitalization, have chosen to keep a permanent chairperson

Business Case for a Permanent Chair

Listed entities that appoint a permanent Chairperson can benefit in several ways including but not limited to the following:

• Freedom from chairman selection headache at each meeting.
• Stability and direction within the Board of Directors with the Chairman acting as a link between the management and the remaining directors.
• Increased confidence of directors and institutional investors.
• Continuity and consistency in boardroom decision-making;
• Reduced compliance burdens through LODR incentives;
• Better crisis preparedness and succession planning; and
• Stronger governance ratings and ESG scores.

Even though the regulatory push for role separation has softened, companies have much to gain by voluntarily adopting this practice. It not only aligns with international expectations but also prepares boards to navigate increasingly complex risk, regulatory, and sustainability challenges.