A Study Of Independent Functioning Of Directors Under Corporate Law
- IJLLR Journal
- Sep 7
- 2 min read
Kaustubh Khade, Maharashtra National Law University, Nagpur
Ananya Panicker, National Law University, Odisha
Introduction
The success of the company is greatly influenced by its directors. A company can have a variety of director types and independent directors are one kind those that functions as the company's guardians. They often have no direct access to the company's management and are not involved in day-to-day operations. Rather, their role is to guarantee that the business is operating in an ethical, just and proper manner. The company benefits from having a variety of independent director categories with a range of backgrounds and expertise as they take into account various viewpoints, it aids the company in making better decisions. Independent directors are also termed to be similar to the majority of a company's trusted advisors. There is nothing personal at risk for them. They also assist in decision-making by taking interests into account.
‘’Independence is a status or condition of a person from being free from all i.e., dependence, subjection, or control.’’ A director, who is said to be independent, should not be subject to any control, restriction, dictation or limitation given by controlling persons. Simply, he must be free from all factors which affect his independent judgment. Many international bodies have attempted to formulate a general definition to the term independence. “Independence is precisely defined to ensure that these directors have no interest in the company that could adversely affect genuine independent and objective judgment.” Fundamentally, it means that an individual should be free to use reasoned judgment without being unduly influenced or restricted by pressure from management or any other dominant shareholder or stakeholder.
‘’If a director is subject to the influence of an interested party or other interested director, or if the director is so dependent on them that their discretion would be stifled, then the director lacks independence.‘’
