Independent directors have emerged as the cornerstones of the worldwide corporate governance movement. Their increased presence in the boardroom has been hailed as an effective deterrent to fraud and mismanagement, inefficient use of resources, inequality and unaccountability of decisions; and as a harbinger for striking the right balance between individual, economic and social interests. While presenting the Berkshire Hathaway 2002 report to shareholders, Warren Buffet criticized the performance of independent directors attributing their inability to participate to the extent of their potential to the lack of a conducive ‘boardroom atmosphere’ and the presence of ‘well-mannered people’ who were unlikely to raise a voice against the flow of the current. While Buffet reasoned that inadequacy of law was not the culprit, it cannot be denied that law is perhaps the only tool which can be used to tame this counter-productive boardroom environment. This paper shall study the concept of independent directors and their inter-relation within the corporate governance framework in India; their appointment, their envisaged role, their liability and the evolution of the concept in India and practical experiences. It shall attempt to outline the broad shortcomings of the current approach and make recommendations which include structural changes as well as a change in the attitude of corporate India.
