Role of Independent Directors under Companies Act, 2013: Will it lead to better Corporate Governance in India?

Abstract

India, one of the most developing economies in the world owes its success to liberalization policies of 1990s and the amendments made thereafter. The post liberalization period has seen a tremendous growth in India's corporate sector with lakhs of companies emerging and running successfully. According to Ministry of Corporate Affairs, the total number of registered companies in India stood at 13, 94,819 in March 2014. There are about 1 l, 235 companies listed in RSE while the number of companies listed on BSE is 5,626. The rest are unlisted companies. These numbers prove that Indian companies have increasingly been able to access newer and larger markets around the world. The reason is that India has become one of the fastest emerging nations to have aligned itself with the international trends in Corporate Governance. This article focuses on the need for Independent Directors in the Indian context. The evolution of Institution of Independent Directors and its impact has been discussed as well. Authors have also made an attempt to enlist the strengthened role of Independent Directors under the Companies Act, 2013.