📈 Institutional Investors Raising Red Flags Over Board Governance

Institutional capital is increasingly prioritizing strong corporate governance and board effectiveness over initial valuations, LYNEAR Wealth Management Co-Founder Dr. Naveen Gunawardane warned at the Sri Lanka Corporate Director Summit 2026. • Multiple Board Seats: Excessive board commitments are viewed negatively as they compromise a director’s time, effectiveness, and meaningful contribution to individual companies. • True Board Independence: Investors look beyond regulatory compliance, questioning whether independent directors are genuinely independent or merely "friends and family" who fail to protect minority shareholder interests. • Expertise Over Box-Ticking: Board diversity and composition must focus on industry expertise, accountability, and active oversight rather than serving as a superficial compliance metric. • Investment Criteria: Institutional investors evaluate governance standards and minority shareholder protections first, using valuation only to determine the timing of an investment.