Position of an Independent Director: Companies Act, 2013

On 1 March 2021, the Securities and Exchange Board of India (hereinafter referred to as “SEBI”) introduced a consultation paper.[1] The paper suggested amendments to improvise the role and the position of an Independent Director (hereinafter referred to as “IDs”) in corporate governance. It proposed to make changes in the provisions of the Listing Obligation and Disclosure Requirements Regulations with respect to the appointment and re-appointment of IDs, the removal of IDs, nomination, resignation, and remuneration of IDs. These changes, if applied in letter and spirit, will change the future of corporate governance. This paper aims to highlight the position of IDs under current provisions and the changes suggested by the SEBI in order to analyze their effect on the role and functioning of IDs in a company.

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What Is Insider Trading and How does SEBI Deals with It?

Insider trading includes trading in a public company by someone who has confidential, price sensitive information, and who uses and deals with such information. Insider trading can either be illegal or legal depending on the knowledge, based on which the individual is trading. According to section 2(h)(ha) of Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992[i] ‘price sensitive information’ means any information relating to present, future or even past, that has the potential to affect the prices of securities and value of the company.

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