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Independent Directors, the governance-guardians of the board, need to revitalise their role

The COVID-19 pandemic and the lockdown it triggered have disrupted life and normal living conditions, most notably by their impact on businesses across the globe. This unprecedented upheaval has revised the customary role of an independent director as watchdog of listed and public companies. At a time when financial markets and mutual funds are reeling under unforeseen economic pressure, independent directors will have to ensure that public stake in the company that they represent is protected while the company itself takes measures to ensure seamless continuity.

Specialised role

Independent directors, though non-executive directors, are appointed for their expertise in particular areas of corporate governance. Their tenure of five years on their company’s Board of Directors prescribes the statutory duty to, among other things, secure risk management, balanced decision-making, and deterrence of fraud.

The Ministry of Corporate Affairs has been cognizant of the specialised role of an independent director on the board of a company, and the necessity of maintaining its independence. It has, therefore, introduced safeguards to protect any exploitation, imposition, or disruption of the functioning of such directors in India.

Origin - The formal origin of the regime of independent directors in India can be traced back to the year 2000, under Clause 49 of the SEBI, Listing Obligation and Disclosure Requirements. Subsequently, the Companies Act, 2013 provided statutory recognition to independent directors who are aooointed and governed under Section 149 of the Act.


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