Independent directors may now have to be more careful with company board meetings – and will have to be vigilant about their role even when they miss one.
Under provisions in the new Companies Bill that incporates changes to company law, these directors, present or absent, will be held accountable for all board level decisions that may involve corporate governance issues.However, they will be held responsible only if those decisions come under their purview. They are usually assigned specific areas in their role.
A government source who did not want to be identified told Hindustan Times that the liabilities of independent directors would be clearly outlined.
“An independent director under the new Companies Bill will be responsible for anything that goes wrong under but comes under his or her ambit, whether he or she has been present or absent,” the official said.
OP Vaish, tax lawyer, who has served on the board of Maytas Infrastructure, which suffered in the accounting scandal involving parent company Satyam Computer Services, said an independent director should be held responsible even if the director stays away in a manner that concerns overall governance.
“Independent directors, however, should not be held accountable for day- to day offences but he must be answerable in the case of irregularities for which he should have been consulted but has not been done,” Vaish said.
Independent directors, under Clause 49 of the listing agreement, have to ensure that business activities of a listed company are done as per legal requirements.
However, they are not involved in day-to-day functioning. They came under severe criticism for the first time when the Rs 7,000 crore Satyam fraud came to light in January 2009.