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Rethinking the role, liability of independent directors
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Neutrality and professional repute can give a board a new paradigm of thinking through an ‘independent director’. The Board of Directors is in a fiduciary position with respect to the company. The independent director is part of the board, but is disconnected with the daily affairs of the company. This gives rise to the question of extent of his/her liability for collective actions of the board. Courts have now distinguished “connivance” from consent that it does not require the parties to be of one-mind. Additionally, in
Chintalapati Srinivasa Raju Vs Securities and Exchange Board of India, the Apex Court recognised the role of independent directors, holding they are not responsible for the conduct of the business of the company. Therefore, there is a window for caveat in legal principal to make an independent director under the exemption from vicarious liability exist.