independent director

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

Background and Introduction

An “independent director” (“ID”) is defined as “an independent director referred to in sub-section (6) of section 149”,[1] where Section 149(6) of the Companies Act, 2013 (“Act”), clarifies that an ID is “a director other than a managing director or a whole-time director or a nominee director” of the company. To be appointed as an ID, a person must fulfil an elaborate set of objective and subjective criteria separated across equity unlisted and listed companies.

Continue Reading Sufficiency of extant law to address governance concerns in relation to “independence” of an independent director in relation to subsequent directorships with the company
Evaluating the Contours of Permissible Remuneration for directors of a company in India

Background and Introduction

All companies incorporated in India are mandated to constitute a board of directors,[1] to which companies appoint different kinds and classes of directors – managing director (“MD”), independent director (“ID”), non-executive and non-independent director (“NED”), whole time director (“WTD”) or executive director (“ED”). Given the pivotal role that a company’s directors play in the governance and operations of companies, the Companies Act, 2013 (“Act”), regulates different facets of a directorship from the appointment, duties, and responsibilities to the remuneration. This blog discusses the contours of remuneration limits to evaluate the length and breadth of permissible director remuneration. “Remuneration” has been defined as “any money or its equivalent given or passed to any person for services rendered by him and includes perquisites as defined under the Income-tax Act, 1961[2]”.[3]

Continue Reading Evaluating the Contours of Permissible Remuneration for directors of a company in India