Legislative Design of Director’s Responsibility in India: In Search of Clarity

Abstract

Indian Companies Act, 2013 addresses the director’s responsibility through specific statutory provisions. While highlighting certain nuances in the legislative design, the article argues for more clarification for the director’s responsibility, specifically for non-executive and independent directors. The normative contribution of this article stresses the need to reform the existing statutory framework for according protection to directors of a company. Operationalization of fiduciary responsibility based on common law principles, along with section 166, Companies Act, 2013 is not clear in the statutory design. Emerging concerns of the director’s responsibility include lack of adequate protection for non-executive and independent directors which deserve more policy deliberations. The recently introduced Insolvency and Bankruptcy Code, 2016 poses evolving responsibility on directors, forming yet another emerging concern in the Indian context.