Abstract
India, one of the most developing economies in the world owes its success to liberalization policies of 1990s and the amendments made thereafter. The post liberalization period has seen a tremendous growth in India’s corporate sector with lakhs of companies emerging and running successfully. According to Ministry of Corporate Affairs, the total number of registered companies in India stood at 13, 94,819 in March 2014. There are about 1 l, 235 companies listed in RSE while the number of companies listed on BSE is 5,626. The rest are unlisted companies. These numbers prove that Indian companies have increasingly been able to access newer and larger markets around the world. The reason is that India has become one of the fastest emerging nations to have aligned itself with the international trends in Corporate Governance.
This article focuses on the need for Independent Directors in the Indian context. The evolution of Institution of Independent Directors and its impact has been discussed as well. Authors have also made an attempt to enlist the strengthened role of Independent Directors under the Companies Act, 2013.
Article PDF
Similar content being viewed by others
Avoid common mistakes on your manuscript.
References
A.C. Fernando, Corporate Governance Principles, Policies and Practices, Pearson, 2006, pp. 5–8.
http://profit.ndtv.com/news/industries/article-nearly-1-lakh-new-companies-registered-in-india-during-2013-14-386638 (accessed on 28th March 2015).
http://www.business-standard.com/article/markets/half-of-indias-listed-companies-about-to-fall-off-the-grid-114071900629_1.html (accessed on 29th March 2015).
http://business.gov.in/corporate_governance/future_prospects.php (accessed on 1st April 2015).
supra [1] pp.12
supra [1] pp. 5–7
Kumar Rath, towards better Corporate Governance – Independent Directors in the Boradroom, 2010, pp.41; Lalita S. Som,Corporate Governance Codes in India, Economic and Political Weekly, Sept. 30, 2006.
supra [1] pp.5,6,8
supra [1] pp.56-57; “Report of the Kumar Mangalam Birla Committee on Corporate Governance”,www.sebi.gov.in, 1999; “Report of the Kumar Mangalam Birla Committee on Corporate Governance”, www.sebi.gov.in, 1999.
http://www.indianacademylaw.com/role-of-independent-directors-in-corporate-governance/ (accessed on 1st April 2015)
Ibid; Supra [6]
Iti Bose, “Corporate governance and law-role of independent directors: theory and practice in India”, Social Responsibility Journal, Vol. 5 Iss 1pp. 94–111, 2009.
“Corporate governance: Changing regulatory scenario and the role of the independent director”, Ernst & Young, 2012
Section 149(3) - (13) & Schedule IV of Companies Act, 2013
Rules 4-6, Companies (Appointment and qualification of Directors) Rules, 2014
SEBI Listing Agreement Clause 49(II) (B)
Companies Act, 2013
Ibid.
Section 4 of Companies(Appointment of Directors) Rules, 2014
Section 149 (6) of Companies Act, 2013
Ibid.
An Independent Director shall possess appropriate skills, experience and knowledge in one or more fields of finance, law, management, sales, marketing, administration, research, corporate governance, technical operations or other disciplines related to the company’s business “[Rule 5, Companies (Appointment and qualification of Directors) Rules, 2014]
supra [ 4]
Section 149(6) of Companies Act, 2013
Section149(9) of Companies Act, 2013
Ibid.
Section149 (10) of Companies Act, 2013
Section 5 of Companies (Appointment and qualification of Directors) Rules, 2014
Companies Act, 2013
Section 152 (2) of Companies Act, 2013
Code for Independent Directors, Schedule IV, of Companies Act, 2013
supra [10]; supra [12]
http://www.business-standard.com/article/companies/satyam-finesends-signals-to-all-independent-directors-114120900792_1.html (accessed on 31st March 2015)
http://articles.economictimes.indiatimes.com/2009-01-17/news/27659723_1_independent-directors-krishna-palepu-satyam-fiasco (accessed on 31st March 2015)
Ibid.
supra [12]; supra [13]
Author information
Authors and Affiliations
Additional information
Authors’profile
Dr. Jaya Mathew is currently working as an Assistant Professor (Law) at KJ Somaiya Institute of Management Studies and Research, Mumbai, India. She holds her PhD (Law) in Feminist Jurisprudence. Jaya has more than 10 years of full time law teaching experience. She has participated and presented in many national and international seminars, conferences and academic, non academic deliberations. Her research interests include Jurisprudence, Women and Law, Commercial Law, Corporate Law, Law of Torts and Constitutional Law of India.
Ms. Warada Bhagwat, is working as Business Analyst with ThoughtWorks Tecknologies (India) Pvt. Ltd., Pune, India .She has recently completed her PGDM in Financial Services from KJ Somaiya Institute of Management Studies and Research, Mumbai, India. Warada has 2 years of experience in IT- BFSI sector. Her research interests include corporate governance and corporate frauds.
This article is distributed under the terms of the Creative Commons Attribution License which permits any use, distribution, and reproduction in any medium, provided the original author(s) and the source are credited.
Rights and permissions
Open Access This article is licensed under a Creative Commons Attribution 4.0 International License, which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons licence, and indicate if changes were made.
The images or other third party material in this article are included in the article’s Creative Commons licence, unless indicated otherwise in a credit line to the material. If material is not included in the article’s Creative Commons licence and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder.
To view a copy of this licence, visit https://creativecommons.org/licenses/by/4.0/.
About this article
Cite this article
Mathew, J., Bhagwat, W. Role of Independent Directors under Companies Act, 2013: Will it lead to better Corporate Governance in India?. GSTF J Law Soc Sci 4, 19 (2015). https://doi.org/10.7603/s40741-014-0019-9
Received:
Accepted:
Published:
DOI: https://doi.org/10.7603/s40741-014-0019-9