Independent Directors

Subject – Economy

Context – ICICI Bank fines former independent Director Rs 2 lakh

Concept –

An Independent Director is a director on a board of directors representing minority shareholders and who does not have a pecuniary relationship with the company or related persons, except for sitting fees.
Their role is to take a stand unambiguously and independently to have a check and balance on the exuberance of majority shareholders that may expose the company to unwarranted risks.
In India, the Companies Act, 2013 defines ‘independent directors’ and codifies their duties and responsibilities.
Schedule IV of the Act lays down the guidelines for professional conduct, role, functions, and duties of independent directors.
The Companies Act, 2013 has mandated all listed public companies to have at least one-third of the total Directors to be independent.
Their role requires them to be clinical while businesses expect them to be practical, that’s the tight rope they walk on.