Appointment of Independent Directors as per Companies Act,2013

 Independent Directors are those directors who either have expertise or network or experience in a particular area. Many company would choose ex-officials of a regulator to be an independent director since they are aware of the functioning of the regulator and this can make the relationship of the company with such regulator fairly smooth.

Independent regulators can also include women directors who are mandated by the law to have on board for all listed companies and other companies having capital and turnover above prescribed levels.

They can bring a fresh perspective to an otherwise all male board. The more diverse thinking and attitudes a board has, the more a project is likely to be analyzed from different angels and sometimes, a company might be able to find an opportunity which the existing board would otherwise not have thought of.

Independent directors, by definition, cannot be paid a remuneration and therefore, usually their payment is in terms of sitting fees for the meetings they attend and/ or chair.

There are some roles such as ‘occupier’ under the Factories Act, 1948 or the director signing the income tax returns on behalf of the company etc. which should ideally be handled by directors who are thoroughly involved with the day to day operations of the company and should therefore, be performed by executive directors.

 

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