Boardroom friction drives listed companies to law firms for governance advice
Companies are increasingly dialing up lawyers for advice on board composition, independent director appointments and disagreements as corporate governance gains prominence and resignations from listed-company boards hit a five-year high.
The advisory work extends beyond statutory compliance as companies strive to balance independent oversight with commercial decision-making. Law firms are also fielding queries on related-party transactions, audit observations, reporting obligations and director compensation, especially when directors question management proposals or raise concerns over board processes.
“Yes, there has been a measured increase over the past year. Most of it is not about reducing independent directors,” said Raheel Patel, a partner at Gandhi Law Associates. “Companies want to know what the law requires, where the board’s discretion ends and how to deal with a director who disagrees.”
According to Patel, queries covering board composition, chairperson selection and committee responsibilities come mainly from promoter-led listed companies, firms planning to list on the stock exchanges and family groups. With limited scope to reduce independent director numbers, listed companies are focusing on governance structures and processes.
The number of independent directors who resigned from listed companies surged to 668 in FY26, the highest level in five years, according to Prime Database. The figure was 15% higher than the 564 resignations in FY25 and 25% above the 530 recorded in FY24.
Listed companies are required to have at least one-third of the total number of directors as independent directors on their boards. Independent directors are allowed to seek clarifications, get professional advice at the company’s expense and record unresolved concerns in board meeting minutes.
“The goal is not to achieve a state of like-mindedness. Disagreement within a board is healthy, and dissent is not the same as disruption,” said Harsh Goenka, chairman of RPG Enterprises. "But it is important that differences are settled inside the boardroom through debate and rational discussion. Every debate must come back to one question: what is right for the company and all its shareholders?”
According to Sampath Kumar, a partner in Trilegal's governance and compliance practice, the adoption of better governance standards is driving some of the increase in advisory work.
Better governance standards
“The motivation for having a certain board composition and appointing particular individuals may vary across organizations,” Kumar said. “The reasons for a review may stem from a specific situation, promoters’ vision and aspirations, the value existing individuals bring to board deliberations, higher corporate governance standards or disputes at the board or shareholder level. But the trend towards adopting better governance standards as a motivating factor has seen an uptick.”
Recent corporate disputes illustrate how tensions between promoters and independent directors can spill into the public domain. Mint reported in August and September that exits at Rashi Peripherals Ltd and Coforge Ltd highlighted disagreements over board processes, appointments and sharing of information.
At Gensol Engineering Ltd, independent director Arun Menon resigned in April 2025, raising concerns about the company's high debt. Two other independent directors subsequently quit. The Securities and Exchange Board of India also took action against the company and its promoters over alleged fund diversion and governance lapses.
KRBL Ltd, the maker of India Gate Basmati rice, also saw a public disagreement in September 2025. Independent director Anil Kumar Chaudhary resigned, citing inconsistencies in board meeting minutes, information allegedly withheld from directors and inadequate deliberations on certain decisions.
“Boards come under real strain and become guarded when a disagreement spills into public view, and that is a failure of process, not of ownership,” said Rana Vikram Anand, a strategic adviser with over 34 years of experience in the BFSI (banking, financial services and insurance) sector and corporate governance. “Independent directors must remember they are there to protect minority shareholders and apply real diligence before signing off on any approval.”
Patel of Gandhi Law Associates cited examples of the legal advice companies seek when boardroom disagreements arise. In one instance, a listed company asked whether it could reconstitute its audit committee after an independent director objected to a related-party transaction. The advice was that the committee's composition could not be diluted to circumvent the objection and that fuller disclosure and an independent valuation would be more appropriate.
Authority or control?
Krishnava Dutt, managing partner at Argus Partners, said disagreements between promoters and independent directors over commercial decisions can become contentious.
“Promoters have often spent decades building their businesses and naturally have a strong sense of ownership and responsibility. Independent directors, on the other hand, have an obligation to evaluate decisions from the perspective of the company and all its stakeholders. The real problem arises when a difference of commercial opinion becomes a question of personal authority or control,” Dutt said.
“Every company should settle its rulebook before a dispute arises: which decisions need the owner's consent, which the board can take on its own, and how a deadlock is broken,” said Anand.
General counsels advise companies to strengthen board processes and documentation.
“Board papers should adequately capture the commercial rationale, material risks and legal considerations underlying significant decisions,” said Sanjeev Gemawat, managing director and group general counsel at Essar Group. “Deliberations, dissenting views and the basis for decisions should be appropriately documented, and directors should have access to timely and independent professional advice where necessary.”
Gemawat said independent directors must exercise oversight without exceeding their legal mandate.
“Corporate governance should not translate into governance by independent directors. Shareholder interests, including those of promoters who have invested capital and built the business, cannot be disregarded in the name of independence,” he said.
Law firms have also suggested introducing an independent directors’ statement in annual reports, setting out their views on board functioning, management information, responsiveness and key risks. Other recommendations include sharing board papers well in advance, accurately recording dissent, providing independent professional advice at the company’s expense and creating clear escalation mechanisms.
Dutt of Argus Partners said regulation alone cannot create a strong governance culture.
“No amount of regulation can, by itself, create the cultural DNA of a corporation. Regulation can prescribe structures, processes and safeguards, but the culture of governance must ultimately come from the leadership of the organization, particularly its board.”
Mint reached out to Rashi Peripherals, Coforge, Sebi and the ministry of corporate affairs for comment. Their responses were still awaited at the time of publishing.