The curious case of independent directors: To what extent are they liable for governance failures?

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Synopsis
The Altico Capital saga has turned the spotlight on the role and liabilities of independent directors. Many of them believe they need more powers and are not culpable for governance failures. But not all independent directors and experts, including some well-known names, agree. As the debate simmers, over a thousand independent directors have chosen to exit silently in a year and a half. ET Prime does a deep-dive.

On the day Altico Capital’s debt papers were downgraded, ahead of the non-banking finance company’s default, two of its independent directors, including chairperson Naina Lal Kidwai, resigned. The resignations and the subsequent crisis that hurt marquee investors and banks have once again raised important questions on the role and liabilities of independent directors (IDs). The current corporate-rescue framework in India has raised expectations