EVOLUTION AND EFFECTIVENESS OF INDEPENDENT DIRECTORS IN CORPORATE GOVERNANCE INTERNATIONAL TRANSACTION

An independent director is a special director appointed to the board of a company who is expected to have expertise in any particular field of marketing and other allied streams and who plays the role of a non-executive director of that particular company. This article documents the rationality behind the introduction of the concept of independent directors on the company board and also presents the evolution of the same from the events that occurred in the USA and UK. The article also discussed the incorporation of the concept of independent directors in the Indian system. It has been seen that diffused shareholding in US and UK plays an important role in checking the managers in their functioning. The corporate governance models differ according to the convictions and laws of different countries in which they are to be practiced. The incorporation of the concept of independent directors in India without taking the Indian corporate structure into consideration may result in undesired outcomes. However, this article collects and presents the various aspects of the incorporation of independent directors in Indian corporate governance. The article effectively discussed the difference and various aspects of corporate governance in different countries like the United Kingdoms, United States, Japan, etc and compared it to the Indian system. This current also discussed the 1997 Asian financial crisis and the role Kumar Mangalam Birla committee played during 1998, formulating the National code on corporate governance in 1999 which is the basis of the formation of the Securities and Exchange Board of India (SEBI).