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An independent director is extremely important to a company's success since they improve governance and raise the organization's credibility. An independent director is a non-executive director who helps the firm expand by offering superior expertise and accurate assessments of the Board of Directors' performance.
As per the provisions of the Companies Act, 2013 an independent director means an Independent Director referred under section 149(6) of the act.
The Independent Directors are appointed by the Board of Directors after judging their capability, experience, skills, and integrity of such Director. Such appointment is approved by the members in the general meeting.
The Independent Directors of the Company must have at least one meeting each year without the participation of Non-Independent Directors, as required by the Companies Act, 2013. Such a meeting should be attended by each Independent Director to take into account the following factors:
Therefore, Independent Directors are crucial to the organization's efforts to increase decision-making efficiency and openness.