Fortune India 40 Under 40 2026: Governance must grow with businesses, says Sebi chief Tuhin Kanta Pandey

Corporate governance must grow alongside businesses as Indian enterprises scale up, with founders and promoter families needing to shift from control to stewardship, Sebi chairman Tuhin Kanta Pandey said at the Fortune India 40 Under 40 event in Mumbai on Wednesday.

Pandey urged companies to build boards not merely to meet regulatory requirements but with the expertise they would need five or 10 years ahead. Independent directors, he said, should have the right information, enough time to deliberate and the freedom to disagree.

“A strong board should also be willing to ask key questions early,” he said, including which assumptions are being made, how strong the data is and whether a decision would appeal to a shareholder who does not sit in the room.

The Sebi chairman said founders and promoter families need to make an important transition “from control to stewardship”. “A founder may begin by thinking, ‘This is my company.’ A steward asks a vital question: Whose capital am I responsible for?”

Good governance, Pandey said, is not merely about complying with a checklist but about making decisions that preserve trust, including when the rule book does not provide an obvious answer.

He said minority shareholders deserve particular attention, adding that there is no inherent trade-off between good governance and business performance. “In fact, both complement each other. The link between the two is trust,” Pandey said.

Trust, he said, is an economic asset that influences investor confidence, access to capital and the willingness of shareholders to stay invested through difficult periods.

Public capital comes with accountability

Pandey also urged entrepreneurs not to view public markets simply as a fundraising event. “Being able to raise public capital is not the same as being ready for public capital,” he said.

Once a company accesses public money, it becomes accountable to a larger set of shareholders, many of whom are investing household savings. “Public capital, therefore, comes with public accountability,” Pandey said.

He said public markets can finance expansion and innovation, diversify funding, create liquidity and allow more citizens to participate in the value created by an enterprise. They also impose discipline by requiring companies to explain their strategy, capital allocation and performance to a wider set of stakeholders.

Technology must be a board priority

Pandey said innovation is bringing new challenges, with AI capable of improving productivity and decision-making while poor governance can create bias and accountability problems. Cyber incidents, data breaches and technology dependency can also disrupt operations.

“Technology must therefore be a board priority. It's no longer merely an operational concern; it's central to business continuity,” Pandey said.

He also called for a stronger culture of research and development, noting that India's R&D spending has remained in the range of about 0.6% to 0.8% of GDP in recent years.

“Closing this gap will require a larger and sustained contribution from industry,” he said, adding that R&D investment requires a long-term horizon, patience and experimentation.

Pandey said India should not remain only a market for technologies developed elsewhere. “Your generation has the opportunity to build that capability in India, own intellectual property, and take Indian innovation to the world,” he said.

From building companies to national capability

He said the deeper test of an enterprise is what it adds to the economy—whether it solves a real problem, creates productive capacity and employment, and builds technology, intellectual property and sustainable value.

“As you scale, the larger opportunities to move from building companies to building national capability,” Pandey said.

Pandey also said a large part of India's next opportunity lies in tier II and tier III cities and beyond, with entrepreneurs having an opportunity to expand jobs, access to technology, finance and markets.

He urged the new generation to combine “the values and the institutional memory of established enterprise” with “the speed and adaptability of the new economy”.

“Knowing what to preserve and what to change will be an important test of leadership,” he said.

Concluding his address, Pandey invoked the Bhagavad Gita's message that the standard set by a leader is followed by others. “Build enterprises that create value, build institutions that deserve trust, and set standards that others will want to follow,” he said.