Monitoring Independent Directors: Who Will Guard The Guards?

I. INTRODUCTION

Independent directors form a cornerstone of corporate governance regulation across the world. In India, a large number of companies are required to appoint independent directors to their boards. Such directors are expected to act as a check on promoters and executives. In this article, the authors examine the efficacy of independent directors in performing this expected role.

The legislature is cognizant of the fact that independent directors may not be functioning as an effective form of control over management — this is evident from the spate of amendments that have been passed over the years concerning the appointment and qualification of independent directors. The authors examine such regulations and consider if they have achieved their desired result. The authors also examine regulations relating to the degree of liability that can be attributed to independent directors and the consequence of such regulations.