Securities Exchange Board of India (SEBI) mandated that all (over 9000) listed companies

are required by 31st December 2005, to have 50% of their Boards comprise of Independent
Directors (IDs), an estimate puts the requirement of Independent Directors at over 30,000, 
under Clause 49 of the listing agreement. The Concept of IDs is not there in the Companies
Act, 1956. The Act has delegated the administration of some sections relating to listed
companies to the capital market regulator, SEBI. SEBI in its circular to stock exchanges in
October 2004, has reviesed the clause 49 of the listing agreement which mainly deals with
IDs and audit committees. The circular says a public listed company with an executive
chairman on the board should reserve at least half of the board to independent directors. If
the chairman is non-executive, a third would suffice. In the case of non-listed companies
there is no such requirement now.

Core Competencies and Qualifications of an ID

 An ID is a non-executive director on the board of a company who has integrity, sense of
accountability, track record of achievements, financial literacy, experience and the
independence to balance the interests of various stakeholders, ability to think strategically,
degree of commitment, sense of devotion

Disqualifications of an ID

 According to SEBI some of the important disqualifications of IDs are listed below;

 Having a 'pecuniary' relationship with the company or any of its arms, other than
receiving the director's remuneration will be disqualified.
 An ID should not be related to the promoters or anyone in senior management
position from one level below the board. He should not have been an executive of
the company or of its audit, consulting or legal firms in the past three financial years.
Besides owning 2 per cent or more of the block of voting shares or being a service
provider to the company, would disqualify one from taking up an Independent
Directorship in a listed company.

Duties and responsibilities of IDs

IDs play an active role in various committees to be set up by a company to ensure good
governance. Listed companies are required to set up audit committees of minimum three
directors, on which, two-thirds should be IDs. The audit committee chaired by a ID, shall
inspect the company's financial statements and can also recommend replacement of the
statutory auditor.

IDs are responsible for formulating and implementing business strategies on behalf of
shareholders and have to ensure that the business activities of the company are compatible
with all legal requirements. They have to perform crucial governance functions.

A platform for IDs

How do listed companies go about finding IDs besides contacting persons known to them or
by word-of-mouth, thereby limiting the horizon? On the other hand, how do thousands of
professionals who are competent and willing to become IDs let the listed companies know
about themselves and get invited? To resolve all these problems a website
www.primedirectors.com  is launched by SEBI Chairman, Shri M. Damodaran, on
September, 14, 2005. This is free-of-charge platform both for professionals to enroll
themselves and for listed companies to reach them, with complete confidentiality.