How To Become an Independent Director Under Companies Act, 2013

Becoming an Independent Director in India is a coveted goal for ambitious professionals determined to advance their careers. This prestigious role not only offers the chance to contribute to a company’s progress, but also presents a unique opportunity to bring about meaningful change in society. Attaining the position of an Independent Director requires a specific skill set, extensive expertise, and valuable experience. So, How to become an Independent Director in India? Let’s explore in this article.

How To Become an Independent Director in India - Latest 2024

Table of Contents

Who is an Independent Director?

A unique type of director, referred to as an Independent Director, is a non-executive member of the board who has no ties to the company other than receiving compensation. Their role is to offer an unbiased viewpoint on the company’s matters and to guarantee that the company is acting in the best interest of its stakeholders. This will enable you to effectively contribute to a culture of transparency and equitable corporate governance.

Qualifications of Independent Director

To qualify as an Independent Director, The following criteria must be fulfilled:

  • Integrity and Expertise: He should be a person of integrity with relevant expertise and experience in their field.
  • Financial Independence: Additionally, it is crucial to maintain financial independence by avoiding any financial connections with the company, its directors, or key personnel. This is necessary to ensure unbiased decision-making.
  • No Family Connections: He does not have any familial connections with the company’s promoters or directors.
  • Transparent Transactions: It is also essential to avoid any significant financial transactions with the company, its directors, or key personnel.
  • No Recent Employment: To maintain objectivity, individuals must not have been employed by the company, its holding, subsidiary, or associate company in the past three financial years.
  • Audit Firm Independence: He does not serve as a partner or executive in the statutory audit firm, internal audit firm, or legal firm associated with the company.

How to Become an Independent Director

Becoming an Independent Director is a clear and achievable undertaking which involves a the below process as follows:

Step 1: Build Relevant Experience

It starts with building relevant experience, as this will provide the necessary knowledge and skills for the role. Those with experience as senior managers, CEOs, CFOs, or CXOs are especially well-equipped for this position.

Step 2: Get Certification

According to the Companies Act 2013, it is mandatory for all Independent Directors to complete a certification program. The aim of this program is to equip them with a comprehensive understanding of the legal, regulatory, and financial aspects of their role. Renowned institutes such as the Institute of Directors (IOD), the National Institute of Securities Markets (NISM), and the Indian Institute of Corporate Affairs (IICA) offer this program.

Step 3: Register with Data Bank Online

The Ministry of Corporate Affairs (MCA) has taken a crucial step by launching the Independent Director Databank. This initiative provides a valuable platform for Independent Directors to showcase their expertise and experience. All individuals aspiring to become Independent Directors must register with the databank and provide essential details regarding their qualifications, experience, and specialized fields.

Step 4: Apply for Positions

Once an Independent Director is registered with the databank, they have the ability to pursue positions with companies in need of their expertise. Additionally, they may be selected for a role by either the company’s shareholders or board of directors.

Role of an Independent Director

Independent Directors play a pivotal and multifaceted role in the success of a company, providing valuable guidance and mentoring. They act as vigilant watchdogs, bolstering the company’s credibility and adherence to governance standards. Participating actively in various company committees, their presence is greatly valuable for the following reasons:

  • Resisting External Pressures: Independent Directors serve as a strong shield against external pressures, ensuring that all decisions are made in the best interest of stakeholders.
  • Succession Planning: The contribution of Independent Directors in succession planning is crucial, as it promotes long-term stability for the company.
  • Impartial Decision-Making: An important aspect of their role is to offer unbiased perspectives and independent judgment to board deliberations, especially when it comes to critical matters such as strategy, performance, and risk management.
  • Performance Evaluation: The Performance Evaluation process involves an unbiased assessment of the board and management’s performance by Independent Directors, promoting transparency and accountability.
  • Stakeholder Safeguard: As part of their role, Independent Directors prioritize safeguarding the interests of all stakeholders, particularly minority shareholders, and strive to find a balance among conflicting interests.
  • Financial Integrity: Independent Directors commonly scrutinize financial information to assess its accuracy and ensure the effectiveness of risk management systems, maintaining the Financial Integrity of the company.
  • Conflict Resolution: In situations where there is a conflict between the interests of management and shareholders, Independent Directors work towards finding resolutions that serve the company’s best interests.
  • Remuneration Oversight: Additionally, they are responsible for establishing appropriate levels of remuneration for executive directors and key personnel, ensuring responsible and ethical Remuneration Oversight.

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Duties of Independent Director

The role of an Independent Director comes with a multitude of key duties which are as follows:

  • Continuous Learning: Keep skills, knowledge, and understanding of the company up to date through regular induction and skill refreshment.
  • Active Involvement: Make an effort to attend both general meetings and various board committee meetings where you hold a position.
  • Company Awareness: Build a strong understanding of the company and its external environment.
  • Ethical Oversight: Promptly report any instances of unethical behaviour, suspected fraud, or breaches of the company’s code of conduct or ethics policy.
  • Legitimate Interest Protection: Safeguarding the company’s best interests, as well as the interests of its shareholders and employees, is a crucial responsibility. As such, it is essential to act within your authority and use your expertise to protect these interests.
  • Supportive Role: it is important to fulfil your supportive role and avoid any actions that may unfairly obstruct the company’s or board committee’s functions. Active participation in committee roles is also encouraged.
  • Confidentiality: Unless provided with board approval or legally required, it is imperative to refrain from disclosing any confidential information, including commercial secrets and unpublished data.
  • Committee Participation: It is essential to actively engage in the committees, whether as a chairperson or a member, to contribute to the decision-making process.
  • Vigil Mechanism: Ensure the company has an effective vigil mechanism, and to prioritize the interests of those utilizing it.


Becoming an Independent Director is a rewarding career opportunity that requires relevant experience, certification, and registration with the Independent Director Databank. The position provides a platform to contribute to the growth of an organization and make a positive impact on society. 

Frequently Asked Questions (FAQ)

If one desires to become an independent director, they must register on the independent director data bank and successfully complete the independent director self proficiency online assessment test. This process applies to both public and listed companies.

These directors offer a fresh outlook and bring valuable insights and expertise to the table. While a non-executive director may have ties to a significant shareholder, an independent director typically has no other affiliations with the company aside from their role on the board.

Become a registered Independent Director in India by enrolling in the Independent Director Databank of the Ministry of Corporate Affairs. Share your credentials and expertise. You can also apply for accreditation programs from renowned institutions such as IOD, NISM, or IICA through the online platform. Once certified, utilize the databank to discover opportunities for directorial roles.

The independent director will serve for a maximum of 5 years, with a limit of 2 consecutive terms. Re-appointment by the company will require a special resolution, ensuring continued merit and expertise.

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