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An Independent director is a
part of the board of directors of a company that does not have any relation to
the company related to material, or pecuniary matters of the Company. They
charge their sitting fees and are those who are not in the whole-time
employment of the Company. However, the management seeks guidance in a
professional capacity for making decisions from the Independent Director.
They are appointed in the Board
to evaluate the performance of the non-independent Director of the Company, to
share their knowledge in the respective areas of their expertise, and they are responsible
for the better compliance. They act as a trustee of Shareholders and sometimes
they also work between the Board and other stakeholders.
Table of Contents
Any individual can become an Independent Director, if he meets the criteria prescribed under section 149(6) of the Companies Act, 2013.
Every listed public company
shall have at least one-third of the total number of directors as Independent
Director of the Company and the following classes of the Companies are required
to appoint at least two directors as an Independent Director
The provisions of the appointment of the Independent Director do not apply to private companies. However, if companies to safeguard the interest of their shareholders and to attract the investors, they can appoint the Independent Director on Board.
The mandate of an Independent Director is as follows;
Also Read: Role of the Independent Directors in India.
The Independent Director shall:
The Independent Director Shall:
The Liability of Independent
Director will only be in respect of acts or omission or commission by a Company
which had occurred with his consent or where he had not acted diligently.
It plays a vital role in the
management, appointing an Independent Director helps the Company in improving
the policies which apply to the Company, transparency, credibility of the
Company, and many more factors. They decide on an independent basis;
Independent Director does not have any relationship with the Company that may
affect the independence of judgment.
Recommended Article: Appointment and Regularisation of Additional Director as per Companies Act, 2013.
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