An independent director is a non-executive director who does not have any pecuniary relationship with the company, its promoters, senior management or affiliate companies. Independent Directors help the company improving corporate credibility and governance standards functioning as a watchdog, and playing a vital role in risk management. Independent director plays an active role in various committees setup by company to ensure good governance.
As per the Companies Act, 2013, every listed company shall have at least one-third of total number of directors as Independent directors and every unlisted public company with paid-up share capital of Rs. 10 crore or more or turnover of Rs.100 crore or more or outstanding loans, debentures and deposit exceeding Rs.50 crore shall have at least 2 directors as independent directors.