The Silicon Shadow: Can Autonomous Algorithmic Systems Be Deemed Shadow Directors Within Section 2(59) Of India’s Companies Act, 2013?
Divyansh Singh & Nitu Kumari, Mumbai University (Thakur Ramnarayan College of Law)
ABSTRACT
Indian company law does not use the expression “shadow director”. What it has instead is a definitional device. Under section 2(59) of the 2013 Act, the word “officer” extends to anyone whose directions or instructions the Board habitually follows. The formula was drafted for people who influence boards from outside the boardroom. This article asks whether it can be applied to an autonomous algorithmic system whose outputs a board adopts as a matter of course, and concludes that it cannot. The obstacles are structural rather than technological. “Person” in the Act takes its meaning from section 3(42) of the 1897 General Clauses Act; “directions or instructions” presuppose a source capable of issuing them; and the definition exists to identify someone against whom a penalty can run. The 2026 Bill amending the corporate laws reworked a number of section 2 definitions but did not touch this one. The workable route is the one India’s securities regulator, SEBI, has already chosen for the intermediaries it supervises: treat algorithmic output as the responsibility of those who deploy the system and rely on it.
I. Introduction
A credit committee that approves what a scoring model has ranked, an investment committee that adopts the allocation an optimiser proposes, a board that receives recommendations generated by a system nobody in the room can fully explain: none of this is speculative in Indian companies, and none of it involves appointing anyone to the Board. The Companies Act, 2013 fixes responsibility on people who hold office and, separately, on people who do not. Section 2(59) belongs to the second group. Its net catches anyone whose directions or instructions are habitually acted on by the Board, or even by a single director or a few of them. The test is behavioural. It asks what the Board habitually does, not what any register records.
