Govt plans review of functioning of independent directors

The government plans to carry out a comprehensive review of the functioning of independent directors, including analysing the reasons for their exit from the boards of companies, as part of efforts to strengthen the corporate governance framework.

The corporate affairs ministry, which is implementing the Companies Act, is also looking to bolster the regime for independent directors and might also take a relook at certain regulatory requirements pertaining to their appointment and removal, a senior government official said.

Besides, the ministry would be creating a database of independent directors under the Companies Act, 2013.

Against the backdrop of the government making efforts to make its role minimal in the affairs of corporates, the role of independent directors is more vital and in recent times there have been instances of concerns being raised about the independence of such people.

The official said there is a need to have a better understanding of the role of independent directors and the kind of challenges faced by them.

Section 150 of the Companies Act, 2013 provides for setting up of a database of independent directors.