INDEPENDENT DIRECTORS: A COMPARATIVE STUDY OF INDIA AND AUSTRALIA

Abstract

The corporate sector plays a very important role in the sustainable growth and development of any economy. Jurisdictions in which corporate are subjected to good governance practices are more prosperous as compared to those having weaker governance. The Board of directors’ independence is considered the cornerstone of corporate governance in any country. Although the concept of independent director emerged in the United States of America as a voluntary measure which was made compulsory there following the management and shareholders agency theory problems commonly referred to as the outsider’s model problems. The giant corporate failures occurring across the various jurisdictions compelled the regulators across the globe to make compulsory provisions regarding the Independent Directors irrespective of the model of corporate governance they were following. Following the initiative taken by the US and UK various other countries also adopted the provision of overhauling and revamping the board structure for ensuring better governance by appointing independent directors. The focus of the present paper is on the study of the regulatory provisions related to the office of the independent director of the two countries i.e., India and Australia belonging to the Asia Pacific region.