Business Ethics and Corporate Governance, Second Edition

INDEPENDENT DIRECTORS

Who is an Independent Director?

There have been a lot of discussions and debates going on in corporate circles and among academicians in recent times on the need for, role of, and importance of independent directors. An independent director is defined as a ‘non-executive director who is free from any business or other relationship which could materially interfere with the exercise of his independent judgement’.¹²

The Companies Act provides a negative definition of an independent director, inasmuch as it renders ineligible eleven categories of persons to be appointed as independent directors in a company, for instance, if a person has held any post in a company at any point of time is disqualified to be independent director ...