Legislating the concept of the independent company director: recent Indian reforms seen through Australian eyes

Abstract

ABSTRACT Recent amendments to the definition of ‘independent director’ in the Companies Act 2013 of India have reopened discussion about what makes a director truly independent. A key question is whether the existence of any pecuniary relationship between a director and his or her company, including one on arm’s length terms, is always antithetical to independence. This article compares the role of independent directors in Indian and Australian corporate governance, and the ways in which the two jurisdictions legislate for the concept of the independent company director. While there are differences between the Indian and Australian approaches to defining independence, it is difficult to demonstrate a link with the different roles independent directors play in the two systems. Further attention to independent directors’ distinctive role may provide a way forward in the current debate in India.