Published Online:July 2024
Product Name:The IUP Journal of Accounting Research & Audit Practices
Product Type:Article
Product Code:
Author Name:Suman Kolpul
Availability:YES
Subject/Domain:Finance
Download Format:PDF
Pages:13
Board size, defined by the number of directors appointed, is regulated by Section 149 of the Companies Act, 2013. This mandates a minimum of three directors for public companies, two for private companies, and one for One Person Companies, with a maximum of 15 directors. The paper examines board size practices in listed Indian small and medium enterprises (SMEs), selecting 70 SMEs from the BSE SME platform based on data availability for the period 2010-11 to 2019-20. These companies are categorized into different sectors. The study employs mean, standard deviation and coefficient of variation for analysis. The statistical analysis reveals a significant trend towards larger boards in Indian SMEs over the decade. The mean board size has increased from 3.59 to 6.16, indicating a move towards larger boards. The decreasing coefficient of variation suggests that board sizes are becoming more uniform across these SMEs. This trend reflects a possible adaptation to corporate governance norms and the need for diversified expertise and oversight within these enterprises, despite additional efforts and costs involved.
Indian Small and Medium Enterprises (SMEs) often face significant challenges when it comes to securing capital. One of the primary reasons for this is the reliance on family and friends for funding. This dependence arises because institutional financial assistance, such as loans from banks and other financial institutions, comes with cumbersome requirements. The paperwork involved can be expensive and time-consuming, and the need for surety and guarantees can be prohibitive for many SMEs. These requirements create a barrier that many small businesses find difficult to overcome.