A recent appointment of a senior professional manager of a large and reputed public listed NBFC as Joint Managing Director for a period of four years effective April 1 has raised interesting issues on continuity by status quo as against a normal succession planning by identifying the right person for that slot.
While the latter approach is widely accepted as the best practice by management gurus, regulators too retaining existing talent subject to merit is an accepted norm.
This appointment raised eyebrows because the person in question is 67 years and has been elevated (not redesignated) as JMD from DMD.
He would be 71 by the time he completes his four-year term.
Age is just a number and should not be confused with competence or capabilities.
Age should not be a factor in judging someone’s competence or capability.
The only question that arises is here is is whether there is nobody else available to fill up the slot.
A survey across public listed companies shows that there are only a few cases where a professional manager in a family owned listed company has been promoted/elevated in a whole time Director position above the age of 65 years.
Shareholders’ vote
The fact that the shareholders have voted in overwhelming majority to this elevation is enough testimony to the merits of the case and the capability of the individual.
The moot point is — whether a rare phenomenon like this needs a more detailed justification from the perspective of succession planning.
Understanding how the Nomination and Remuneration Committee (NRC) of the Board brainstormed this recommendation and the manner in which it was captured in the minutes as also how the Chairman of NRC briefed the Board and the discussions at the Board on this agenda item would be an important lesson to learn.
A cynic would remark that most NRCs are at best a pass through vehicle particularly in family owned companies.
Considering the pedigree of the company in question this appointment would have surely passed all the tests of both form and substance with robust and foolproof documentation.
RBI’s view
Regulators in the recent past have voiced concerns over succession planning more in the context of risk mitigation.
Audit and Risk Management Committees are getting more vocal about the No 2 person of every top management person being part of the presentations and deliberations.
There is no stand alone RBI circular on “Succession planning for NBFCs”.
Instead the requirements are spelt out in various guidelines issued in 2023 and 2025.
The crux as laid out by the regulator is that — for the middle and upper layer NBFCs boards are responsible for “orderly succession at Board and Senior Management level”. These guidelines also emphasise structured management continuity in financial entities.
We live in times where board responsibilities and duties are getting onerous.
Governance norms
Regulators like SEBI, RBI and in the recent times NFRA have raised the standards of overall governance across companies.
The subject of succession planning has now gradually moved from management school discussions to ‘on-the-ground’ implementation.
The unusual case discussed here should ideally be analysed threadbare to serve as a lesson for similar cases that come up in future.
For connoisseurs of Bridge — a fascinating card game — every deal is distinct and different. Likewise every board meeting throws up something new and different particularly for independent directors.
The writer is a Chartered Accountant
Published on April 15, 2026