Summary: SEBI’s recent informal guidance on the appointment of an independent director related to a promoter group member has reignited the debate on the meaning of “independence” in corporate governance. While the guidance adopts a strict interpretation of the statutory definition of “relative” under the Companies Act, 2013, it raises broader questions about whether formal legal criteria adequately capture concerns of influence and objectivity. This article examines the guidance note in the context of the legislative framework governing independent directors and compares it with the views expressed by key committees on corporate governance. It argues that the effectiveness of independent directors depends not only on compliance with prescribed objective eligibility requirements but also on preserving the substantive spirit of independence that underpins the institution.
Continue Reading Independent Directors and The Boundaries of Independence: Reflections on SEBI’s Recent Informal Guidance
