Filter Coffee #007

(Shaken, not stirred) On boards, wills, ants, and more

Welcome to this week’s edition of Coffee… Filter Coffee. You may have noticed that we’ve reached edition 007, and for many of us, it’s impossible not to associate the number with the dashing and dangerous superspy James Bond, created by author Ian Fleming. You’ve probably watched your share of Bond movies, but not all of them were inspired by the stories that Fleming wrote. Whether or not they were true to the source material, they certainly captured the public’s attention as Sean Connery donned the suit in Dr. No — the first movie, shot in 1962. Connery went on to star in several other Bond Movies such as From Russia with Love (1963), Gold Finger (1964) and Thunderball (1965), right up to You Only Live Twice (1967), his last film in sequence as the iconic spy. He was asked to reprise the role for Diamonds are Forever (1971), and he did — for $1.25 million; a large sum those days!

While Connery was the first Bond, several actors have taken up the role over the years, including Roger Moore, Pierce Brosnan, and Daniel Craig. But no matter which incarnation of Bond is your favourite, it’s hard to deny that the character remains etched in everyone’s memory.

I can’t resist telling you a 30-year-old joke:

Q: Why did Brooke Shields refuse to marry James Bond?
A: She did not want to become Brooke Bond!

If you’ve been enjoying your Sunday Filter Coffee, why not share some with your friends, family, or colleagues?

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❓Q&A on Governance

After reading my previous newsletter on the topic of Corporate Governance, two readers asked me some very pertinent questions:

1. Why should the roles of Chairman & CEO be segregated when in fact a CMD of a Promoter-driven Company brings to bear their years of experience and can be effective both as Chairman and CEO?

Not all promoters are technocrats or hands-on chief executives. They hire the best of talents to create value not just for themselves but for the other shareholders. My friend S. G. Murali, who posed this question, may well be right that in some companies the Promoter may be the driving force, and as chief executive, they steer the company through choppy waters. However, when we speak of separating the roles, we are really looking at the functional dichotomy, which is one of ownership and management. Running operations efficiently and maintaining the top & bottom lines at healthy levels is largely the duty of the Managing Director and their team of KMPs (Key Managerial Persons). When you contrast this with the role of the chairman of the board you find that their primary role is to promote boardroom democracy and elicit the views of every board member, welcoming constructive criticism. The office of Chairman is not an office created by the Companies Act. It simply alludes to a person who is elected to chair the meetings of the Board and shareholders. There is thus no significant advantage that an MD would derive by also becoming the Chairman. It is generally believed that an MD who is also the Chairman might conduct the meetings in a manner conducive to their own business priorities and, in the process, limit open discussions.

Mr. Anand Mahindra who had been chosen to be the Executive Chairman until November 2021, stepped down as Chairman in December 2019 when the issue of separating the roles was formally being recognised. However, when SEBI deferred the implementation to April 2022, Mr. Mahindra resumed his CMD position in February 2020 and will likely be there until the end of his term in November 2021. This may perhaps give him the time that he needs to put in place a structure that facilitates greater synergy between the Board and the Management.  In contrast, Mr. Kumar Mangalam Birla remains the Chairman of the Aditya Birla Group and does not hold any executive position. Both Mr. Mahindra and Mr. Birla are promoters, and both the groups have done exceedingly well under their leadership, having institutionalised Corporate Governance meticulously.

Though many CMDs provide strong leadership and promote boardroom democracy, when I take a view across companies, I do believe that the separation rule which applies to all the top 500 listed companies, augurs well for greater engagement and opens up possibilities of boards functioning with greater independence sans any business bias stemming from management entrenchment. Despite this, I do not dispute the ability and sagacity of certain promoters who are in executive chairman positions, to ensure that Boards provide direction to the Management rather than toeing the line that Management prefers.

2. Getting onto Boards is increasingly becoming a liability issue. How do you mitigate this?

This question is from Tarun Kunzru, but has also been posed to me over the years by many aspiring directors who attend the Master Class for Directors organised by the 🔗 Institute of Directors (IOD). Tarun, when a person becomes a Director, they are immediately vested with the fiduciary duty of protecting the interest of minority shareholders who are not represented on the Board, in addition to other matters of corporate governance. It is a kind of trusteeship where those shareholders expect you to be the guardian of their interest. A Director incurs liability when they are privy to something that is either illegal or unethical. So if you’re making decisions you have reservations about, mitigation lies in being vigilant and uncompromising. Financial statement, for example, is an area that can trip up a director if they are not vigilant.

Regulations that obligate listed companies to make continuous disclosures provide a natural hedge against the risk of non-compliance, but the same thing cannot be said of many unlisted companies. And if these companies ever come under the lens of a regulator, it can be quite uncomfortable.

All of this should not dissuade you from becoming a Director. Being thorough with the Board papers, voicing your opinion without fear or favour, asking the right questions, challenging assumptions, reviewing internal controls, ensuring compliance and giving due regard to environment, health, and safety — all of this will mitigate the perceived liability and you will find the role quite fulfilling. But remember the famous words of Steve Jobs:

“Don’t let the noise of others’ opinions drown out your own inner voice.”

Go ahead Tarun, don the role, live the role and you are on a roll. Trust me.

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📑 Expanding on Contracts

Fixed Term Contracts

I was in discussion with a client of mine about engaging people on a fixed term to work as employees (as opposed to being a consultant or contractor) for specific functions over a specified period. In this agreement, the two parties would either part ways or sign another fixed term contract to perform another function within the scope of their abilities at the end of that initial period. Even in the context of remote working, people are being engaged to perform certain jobs either on a full time or part-time basis. These contracts resemble, in some ways, service level agreements where the payment is commensurate with the output both in terms of quality and quantity.

Most companies prefer not to engage the workforce through contract labour, both from the point of view of effective supervision and the cost of engagement. Whilst the salary paid during the fixed term does not attract GST, this tax would apply if the engagement is done through a contractor as each invoice for service charges will have the GST added to it.

Companies can innovatively hire employees on a part-time basis and pay them the commensurate salary. This group of persons is referred to as “Gig Workforce”. The word Gig is derived from a short performance one puts up on stage or in a social set up. What was once a slang word is now becoming part of corporate jargon. Consultants, freelancers (like my editor Shivangi) and project-based professionals are hired on a fixed-term basis, giving corporates the flexibility to control overheads.

I recommend this LiveMint article to appreciate the relevance of gig workforce and the advent of the gig economy: 🔗 India Inc embraces the part-time manager.

Where there’s a will there’s a way, but where there’s no WILL there are relatives!

Even in this day and age, a large section of the population still shies away from drawing up a Will. Some feel that they have plenty of life left in them and why then should they be contemplating death? Others say nomination is adequate and there’s no need to make a Will. Still others say, “We hold the asset or account jointly and the survivor gets what is left belongs to the survivor.”

These statements all seem quite convincing but they don’t offer a guarantee against litigation. Someone may challenge the nomination, and while it could be argued that nomination is not a testamentary disposition, designating a person to receive the money or the asset in trust for all the heirs is a wise move. Is it not better to make a Will and rule out a post mortem fight? 

The purpose of making a Will is to ensure that the estate passes on without a hitch. I encourage everyone to seriously consider making one. There are a few basic things to know about the form and content of a Will that I’ll summarize for you.

First, we must understand the two kinds of succession. Testamentary succession is where there exists a Will and Intestate succession is where there is no Will and the personal law of inheritance will come into play. You then go through the process of Succession Certificate, Letters of Administration, etc. depending on the situation.

The person making the Will is the Testator (Testatrix for women). A Will is a declaration of intent of the testator as to how his estate may devolve on the beneficiaries under his Will, after his death.

A Will need not be on a stamp paper and is not compulsorily required to be registered, although registration may be an option.

You will need to nominate a person as the Executor of the Will whose duty will be to ensure that the wishes of the testator are carried out. For that purpose, the executor will apply for a Probate, which is nothing but the Will duly certified by a competent court to evidence the fact that the Will has either not been challenged —  or if it has been challenged, has withstood that challenge.

It is important to note that there is no inheritance tax. The Estate Duty Act imposed a tax on the total value of the assets remaining in the estate at the time of the Testator’s death. However, this estate duty was abolished in 1985 and hopefully will not be revived, as some people fear.

A Will, in order to be valid and enforceable, must be attested by two witnesses and the language of attestation should be clear. The following is an example of such attestation:

“On the date last above written, X, known to us to be the person whose signature appears above at the end of this Will, have declared to us, the undersigned, that the foregoing instrument, consisting of N pages, including the page on which we have signed as witnesses, to be their Will. He has signed the Will in our presence and, at their request, in their presence and in the presence of each another, we now sign our names as witnesses.”

Witness:                                                               Witness:

Having said that, a holograph Will — one which has been written in the testator’s own hand — does not require attestation, technically. But I would still recommend attestation to rule out contentions of the Will having been executed under duress or coercion.

There is yet another class of Wills called Privileged Wills. These are typically a testamentary disposition made by a soldier when he is laying down his life. He may either write it down himself or ask another soldier to write as he dictates or orally communicates his wish to another person.

You may be interested to know that one of the Muslim laws enshrined in the Shariat is the Marz-ul-Maut or a bequest made by a Muslim on their death bed. Making a Will was not a preferred practice, historically, and so the Islamic tenets provided for gifting of property by a Muslim when on their deathbed.

There are two conditions, no matter whether bequest is made orally while on a death bed or through a Will:

a) No heir should be excluded or disqualified.
b) The doctrine of bequeathable 3rd would apply, in the sense that the value of the property that can be gifted away should not be greater than a third of the total value of the assets. The intention was to ensure that the balance two-thirds is available for distribution among the other heirs.

The Law of Wills is a vast subject, covering several kinds of Wills. If you are interested in knowing more or wish to be guided on how to draw up a Will, 🔗 please feel free to write to me. I would even be willing to organise a free webinar on this topic if there is enough interest in this topic.

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In a previous letter, I featured the Elephant Man. I now move to the other end of the spectrum and present to you…

🐜 The Ant-Man

My dear friend and fellow Freemason Sunil Kumar is a Myrmecologist. Wikipedia describes Myrmecology as a branch of entomology focusing on the scientific study of ants. Some early myrmecologists considered ant society as the ideal form of society and sought to find solutions to human problems by studying them. Ants continue to be a model of choice for the study of questions on the evolution of social systems because of their complex and varied forms of eusociality (social organization). In more recent times, ant colonies are studied and modelled for their relevance in machine learning, complex interactive networks, stochasticity of encounter and interaction networks, parallel computing, and other computing fields.

Sunil and I had an enlightening chat about ants and the things we can learn from them.

Pras: Sunil, you are primarily a Senior Science and Innovation Adviser to the British High Commission. Why this fascination with Ants?

Sunil: Ants are truly fascinating creatures. They can carry close to 50 times their body weight, they travel in a line and even if you break that line, they can quickly form a new one and continue. Quite interesting, right? 

Pras: Indeed. And how did you develop a love for the tiny creatures?

Sunil: It began in 1996, when I started visiting the Indian Institute of Science to do some research about ants. During this time, I came across a book titled The Ants by American entomologist E O Wilson. This book contains every minute detail there is to know about ants and hence, it is often considered the bible when studying ants. Believe it or not, ants and humans are a lot alike — like humans, ants too have slavery, some ants rob other ants, steal food, there is hierarchy and dominance within the nest, physical and chemical warfare and so on. Whatever we have today has been learnt from ants over the years.

Pras: That’s very interesting! Tell me more about the influence this book had on you and how you started your own journey down the ant’s path.

Sunil: After reading E O Wilson's book for two weeks, I would find various species of ants within the IISc campus, place each of them under a microscope, and observe them carefully. Nowadays, if someone wants to observe them like this, they can check out some videos on YouTube. Earlier, there was no such provision. I would record my observations in my book and this went on for a year. I went to Lalbagh, Cubbon Park, Sankey Tank, my own garden and so on. I was able to find out that Bengaluru alone has about 110 different species of ants, while a country like the United Kingdom has only 57 species. In places like the UK, where the temperature falls low, fewer insects are found.

Pras: Surely, you acquired so much knowledge about ants that you could have written a book.

Sunil: Of course I did! There hasn't been a book written on ants in India since the one written by Lt Colonel Bingham, a British officer, in 1903. So in 2006, my friend Anil Narendra, an Associate Professor at Macquarie University in Australia, and I decided to bring out a book on ants in India. As we wanted it to look unique, we decided to photograph the ants whenever we did a field visit and include those here. Within a few months, we put together the book and got it published under the title On a Trail with Ants: A Handbook of the Ants of Peninsular India.

Pras: Where can one get a copy?

Sunil: Oh! I was flattered when all the 2000 copies were sold out. The second updated edition will be out sometime next year.

Pras: After people read your book, you must have been invited to speak on this fascinating topic?

Sunil: Yes, indeed. I gave talks and conducted workshops. When people participate in my workshop, the first thing I do is give them paper and a pencil and ask them to draw an ant. You'd think that would be easy but surprisingly, this is where everyone fails. When I show them a photo of an ant, they will realise where they went wrong. That's how their curiosity to observe ants begins. Unlike birdwatching where one needs to travel at least two to five kilometres, ant species can be found within 100 metres. I help participants find at least 20 to 30 species of ants in Cubbon Park alone within a short distance.

Pras: Sunil, I have heard that ants are a female-dominated species. Can you elaborate?

Sunil: There is a queen that lays eggs, instructs all the other ants to work and controls them by releasing certain chemicals. Most of the worker ants are female ants. From getting food to protecting their nest, everything is done by them. The queen ant makes sure that it lays eggs continuously to increase the population and see that their kingdom is alive. The queen and its daughters are the main actors here. For detailed watching and understanding of this, one must participate in the ant walk. Hopefully, when the pandemic is over, we will have more ant walks in the city.

Thank you Sunil for this revelation about the tiny creatures; they are truly fascinating.

Readers, Sunil (at the centre in the picture above) is famous for Ant Walks where he takes people across Bengaluru to tell them interesting facts about ants and help them discover at least 30 different species in just two hours. If you are interested in going for an Ant-Walk in Bangalore, 🔗 please write to Sunil.

Another interesting aspect about Sunil is that he and his friend Janardhan Reddy are passionate about ecology and afforestation. They have toiled for over 6 years to develop a forest for Infosys over a 300 Acre land. Seeing is believing right? Watch the video below:

Potpourri

✍🏾 Have we surrendered the art of writing to the keyboard?

I am afraid so, speaking for myself. During the days when we had no computers, we used to write in at least two languages without getting cramps. Now when I write in English it is not so bad if I take a break after 10 lines. But writing in Kannada, which was once second nature, has now become painful. When my mother was alive, I wrote to her regularly in Kannada but after she died I lost the habit and I developed cramps after writing a few lines. The worst thing is I don’t know how to use a Kannada keyboard either.

The days of postcards, inland letters are virtually gone.  Once I decided to write a letter to my niece and post it, to surprise her. But I was surprised to see that there was not a single post-box anywhere near where I live. Eventually, I found one and the response I got was better than the “thx” that you get to an email. I think all of us must make an effort to spend some time writing. My grandmother used to make us take a notebook and write “Sree Rama Jaya Rama Jaya Jaya Rama” 100 times every day. She swore that besides helping us to concentrate, this would ensure we never get arthritis! I am considering resuming that in English and perhaps in Kannada as well. Would you like to try?

As for comparing handwriting with using a keyboard, I read a short but meaningful column by Tiny Nair: 🔗 When the running hand dropped out of the race.

🙃 When the smile did not reach the eye!

As we all know, ever since COVID turned our lives on their head, we have gone into hiding. We stay indoors and step out wearing a mask, with or without face shields. If someone is walking towards you, you pull the mask higher and give a cursory nod when under normal circumstances we would have smiled, even if faintly. I am a compulsive extrovert. I wish all and sundry when I get into a lift and my wife asks me, “Do you know them?”. I tell her, “You don’t have to know someone to smile and say hello.” That’s all very well, but careful about randomly smiling at ladies - you may develop a toothache.

Smiling with your eyes and listening with your eyes may appear bizarre, but if your smile does not reach your eyes, it sort of ends up as a grimace. Likewise, if you are not looking at the person when spoken to, the person may think you have zoned out.

When you laugh, mask, or no-mask, it is a full-body response. You throw your neck back as you guffaw, your shoulders do a jig, and at times you even clutch your stomach. But a smile and a grin are facial moves. You need to let your eyes do the smiling and don't mask your smile.

That said, Rishi Khanna wrote a short column in the Hindu Magazine about how with fewer people around and all in masks, there is no need to smile or talk - 🔗 For introverts, a dream come true.

🎭 Masks of a different kind

Matshona Dhliwayo is a Zimbabwean-born and Canadian-based Philosopher, Entrepreneur and author of books such as The Little Book of Inspiration, Creativity, The Book, 50 Lessons Every Wise Mother Teaches Her Son, 100 Lessons Every Great Man Wants You to Know, and Lalibela's Wise Man. He said something which resonates with the uncertain future that COVID-19 has inflicted on us:

“If you wear a mask for too long, there will come a time when you cannot remove it without removing your face.”

He was perhaps alluding to the way we let our face wear a perpetual expression like a scowl, or deadpan, which you can’t get rid of unless you change your face! This literally means that if you make a conscious effort to change your facial visage, you not only discard that mask but also have to present a new face. Easier said than done.

🤔 Food for thought

• 100 years ago everyone owned a horse and only the rich had cars. Today everyone has a car and only the rich can afford to keep a horse.

• Why isn’t a fireman called the water-man?

• Is it not strange that the word Funeral starts with Fun?

• If a vegetarian eats vegetables what does a humanitarian eat?

• Why are goods sent by ship called Cargo and those sent by truck, Shipment?

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This year, we celebrated our independence day virtually. The Godrej Group celebrated India’s 74th Independence Day today with the release of a digital film highlighting the pivotal role it has played as nation builders to our country.

Aptly titled the ‘The Box that Unboxed India’, the film opens by recalling Godrej’s contribution to India’s first democratic elections in 1952 when the Group made 1.2 million ballot boxes for the voters, literally ‘unboxing freedom’.

My “nephew” Hrishikesh Kannan (son of my very dear friend & brother V. Kannan) has lent his voice to this film. Please do watch this exciting piece of history, recaptured by the Godrej Group team lead by Ms. Tanya Dubash, Executive Director and Chief Brand Officer, Godrej Group. She says: “The story of the Godrej Group is the story of Independent India. It is a symbiotic relationship. Just as Independence gave wings to our aspirations, so too have the businesses we have built up over the decades helped ignite the dreams of a nation.”

Please watch the video below, and with that, see you next week!