LIABILITIES OF NON-EXECUTIVE DIRECTORS

The Companies Act, 2013 vividly captures the roles, responsibilities, procedure and extent of liabilities for the functioning of the company as a legal entity and those who are official representatives of the company making decisions on its behalf. The Directors of the company are bestowed with the responsibility of framing the policies which is a legal function is exhibited in a responsible eco-system, whereas it is well said that responsibilities come with liabilities and will not be wrong. It is important to understand the liability one might have towards the company and the legal authorities because a large number of companies are registered every day and it is not possible to keep an eye. Thus, to inculcate and ensure that the company runs and adopts fair business practices and avoids getting engaged in frauds or unethical practices, the directors are liable to foresee that the same. If the liabilities are not defined in a company along with their extent then it will be always become a duty of the court to determine that in every case which is cumbersome, considering a similar basis of roles and liabilities is needed for uniform practice.

There is no specific distinction arising out of the powers or responsibilities bestowed to the Executive or Non-Executive Directors. This can be concluded from section 166 of the Act which equally enunciates the responsibilities on behalf of both executive and non-executive directors. The J.J Irani committee report 1 can be seen as a good reference to understand and summarize the roles and responsibilities of the independent directors. The Companies Act 

lays down specific provisions in relation to independent directors in the Code of Conduct prescribed under Schedule IV. It also provides stringent qualifications for independent directors, including detailed guidelines for their appointment, roles, responsibilities, removal and resignation, to There is no specific distinction arising out of the powers or responsibilities bestowed to the Executive or Non-Executive Directors. This can be concluded from section 166 of the Act which equally enunciates the responsibilities on behalf of both executive and non-executive directors. The J.J Irani committee report[i] can be seen as a good reference to understand and summarize the roles and responsibilities of the independent directors. The Companies Act lays down specific provisions in relation to independent directors in the Code of Conduct prescribed under Schedule IV. It also provides stringent qualifications for independent directors, including detailed guidelines for their appointment, roles, responsibilities, removal and resignation, to ensure that they work in an objective manner. Some of the key functions under the Code of Conduct include:[ii]

• help in bringing an independent judgment to the board,
• scrutinise the performance of the management in meeting goals,
• safeguarding the interests of all stakeholders, particularly, minority shareholders,
• balancing the conflicting interests of stakeholders,
• in cases where they have concerns about the running of the company or a proposed action,
• ensuring that those issues are addressed by the board, and to the extent they are unresolved, insisting on such concerns being recorded in the minutes of board meetings,
• report concerns of unethical behaviour, fraud or violations of the code of conduct or the ethics policy of the company. The Companies Act also mandates the compulsory presence of independent directors in the corporate social responsibility committee, nomination and remuneration committee and the audit committee of companies.

This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, Or Religion Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being.