Independent Directors And Mass Resignation




Drishti Arora, OP Jindal Global University

Introduction

Board members have a fiduciary duty to the company's shareholders because one of their roles is to convey shareholders' interests to management. Members of the board monitor management's operations and work to keep the company in business. Any act of commission or omission by a director is subject to liability. They ought to maintain their reputation. While independent directors may engage in passive monitoring, if they are informed of a decision where there is a larger chance that negligence will be detected, they may choose to quit board rather than face the repercussions. In such cases, the resignation of a director may have an impact on the governance of the company.

Although there have been a variety of improvements in corporate governance, the adoption of Clause 49 of the Stock Exchange Listing Agreement by SEBI in 2000 is an important step taken to encourage independent directors to be involved in functionality of the company.1 Clause 49 specifies the need for independent directors to serve as a board member in a firm; (ii) provides a definition of independence (albeit with modifications throughout time); and (iii) outlines the specific responsibilities and liabilities of independent directors.

Indian Journal of Law and Legal Research

Abbreviation: IJLLR

ISSN: 2582-8878

Website: www.ijllr.com

Accessibility: Open Access

License: Creative Commons 4.0

Submit Manuscript: Click here

Open Access Logo

Licensing:

​All research articles published in The Indian Journal of Law and Legal Research are fully open access. i.e. immediately freely available to read, download and share. Articles are published under the terms of a Creative Commons license which permits use, distribution and reproduction in any medium, provided the original work is properly cited.

Disclaimer:

The opinions expressed in this publication are those of the authors. They do not purport to reflect the opinions or views of the IJLLR or its members. The designations employed in this publication and the presentation of material therein do not imply the expression of any opinion whatsoever on the part of the IJLLR.