Topic: corporate governance.
7) Discuss the role and significance of independent directors for corporate governance.(250 words)
Why this question:
The question is in the context of corporate governance.
Key demand of the question:
Explain what is the role of an independent director in the corporate governance paradigm.
Discuss – This is an all-encompassing directive – you have to debate on paper by going through the details of the issues concerned by examining each one of them. You have to give reasons for both for and against arguments.
Structure of the answer:
Define briefly what is corporate governance.
Discuss who is an independent director – As per section 149 (6) of The Companies Act, 2013, Independent Director means any director other than a managing director or whole-time director or a nominee director.
Explain the role of independent directors in general – Independent directors act as a guide to the company. Their roles broadly include improving corporate credibility and governance standards functioning as a watchdog, and playing a vital role in risk management. Independent directors play an active role in various committees set up by company to ensure good governance.
Explain thus the Need to have independent directors on the board.
Conclude that relation of Independent Directors with the Corporate Governance Principles is crucial for good governance in the corporate world.