Independent directors are supposed to be the conscience-keepers of the board. They’re not involved in day-to-day management and are not tied to promoters through close financial or family relationships. That distance is exactly why the law expects them to provide objective oversight.
Their key roles include:
- Evaluating major transactions, especially related-party deals,
- Overseeing risk management and internal controls,
- Protecting interests of minority shareholders,
- Sitting on audit, nomination and remuneration committees.
In practice, independence depends less on labels and more on behaviour. An independent director who blindly signs everything without questions is useless. Courts and regulators increasingly ask: did they apply their mind, record dissent where needed, and act with due care?
For professionals considering such roles, it’s important to understand the legal duties and potential liabilities. Being a “rubber stamp” may feel convenient but can backfire badly if fraud or governance failures are exposed. Asking uncomfortable questions and insisting on proper records is part of the job, not an overreaction.
When independent directors do their work honestly, they strengthen both investor confidence and long-term sustainability of the company.
