Role of Independent Directors in Corporate Governance: An Appraisal of the Relevant Provisions of Companies Act 2013

Abstract

In recent years, ineffective Boards of Directors, inattentive audits, and weak enforcement of corporate laws have led to major corporate scandals around the world. Poor corporate governance can harm both the national economy and universal financial stability. The loss of countless jobs and huge investments as a result of failures of corporate governance has created need to restore investor confidence in corporate entities. It sets up a structure in which the makeup of the Board and the involvement of insiders on reimbursement committees are determined. If these corporate governance structures result in situations where actions beneficial to directors do not also benefit shareholders, then shareholders may suffer. Corporate ethics programs usually address conflicts of interest that may arise in the firm's activities. Some Boards of directors take active roles in their firm’s ethics programs by actively overseeing the programs. It is the duty of the Board to promote good governance practices i.e. accountability and transparency. Enterprises that have Boards actively promoting good governance not only attract value investors but also command a premium in the stock markets. The Board of Directors has to improve the reputation of the enterprise they represent. They have to provide proper advice and counsel to the top management as and when required. They should communicate with the company stakeholders from time to time and brief them about company’s performance. In its strategic role, the Board plays the role of an elder statesman. It is the duty of the Board of Directors to guide the management in articulating the enterprise’s vision and mission. Independent Directors need to remain vigilant of environmental influences and closely monitor industry developments in order to offer wellinformed recommendations to senior management. The planned research project involves a thorough evaluation of the regulations concerning the responsibilities of independent directors outlined in the Companies Act 2013, utilizing the most recent case studies for analysis.