Towards better governance

New norms for independent directors need strict monitoring

The Securities and Exchange Board of India (Sebi) has made several important changes to regulations pertaining to independent directors (IDs). These changes are designed to improve corporate governance by distancing IDs from promoters and managements, and to increase transparency on remuneration for IDs. Under the new regulations, which come into force in January 2022, IDs must be appointed, reappointed, or removed through a special resolution of shareholders. This requires a 75 per cent vote in favour as distinct from an ordinary resolution, which requires only a simple majority. This, in itself, should ensure that IDs are approved by minority shareholders,