How to Become an Independent Director in India

 

11 Steps to Become an Independent Director in a Prominent Organisation

Becoming an independent director in India involves several steps that align with the guidelines provided by the Ministry of Corporate Affairs, Government of India, and the Companies Act of 2013.

Step 1: Assess Eligibility and Qualifications

- Educational Background: A strong educational background in business, law, finance, or management is advantageous.

- Experience: Experience in business management, corporate governance, or professional fields is essential.

- Skills: Strong analytical skills, independent judgment, and integrity are crucial.

- Age and Residency: As per the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 for the listed companies the minimum age to get appointed as an independent director is 21 years and the maximum age is 70.

A foreigner or a non-resident Indian can become an executive or a non-executive/independent director of Indian companies whether public or private.

Step 2: Acquire Necessary Knowledge

Understanding of Corporate Laws: Aspiring independent directors need to familiarise themselves with the Companies Act, of 2013, especially the provisions related to directors’ roles and responsibilities.

- Corporate Governance: One must learn about corporate governance practices, ethical standards, and risk management.

- Get certified: Become a certified independent director by getting certified by a reputed organisation.

Step 3: Register on the Independent Directors’ Databank

- The Ministry of Corporate Affairs (MCA) has set up a databank for independent directors. Registration is mandatory.

- The databank provides a platform for individuals to get selected as independent directors in various companies.

Step 4: Complete the Proficiency Self-Assessment Test

After registering in the databank, you must pass the online proficiency self-assessment test conducted by the Indian Institute of Corporate Affairs (IICA).

- The test assesses understanding of company law, securities law, basic accountancy, and such relevant subjects.

Step 5: Personal Branding

Personal Branding and storytelling are critical tools for establishing your UVP or Unique Value Proposition as an independent board member in the corporate world.

Storytelling can help create a narrative that resonates with the ethos of corporate governance and yet reflects one’s individuality.

An effective personal brand sets an independent director apart, highlighting their unique expertise, ethical standards, and decision-making skills. Being a domain expert in areas such as ESG and CSR, corporate law, cybersecurity, international business, etc., can be useful. You need to identify board committees where you can add value.

- Enhance your profile with relevant experiences, certifications, and skills that demonstrate your capability to serve as an independent director.

Step 6: Strategic Networking

-Build a network with industry events, seminars, and forums.

- Connect with senior/successful independent directors to learn the ropes

- Network with Founders and Promoters of Startups

- Network with the board community esp NRC committee members

Step 7: Apply for Positions

• Monitor corporate announcements and stay in touch with board search firms for openings.
• Craft a Board CV highlighting your corporate governance-related skills.
• Utilize your network and the Independent Directors’ Databank to identify opportunities.
• In the long run, build a brand that gets you invited to the boards

Step 8: Understand the Selection Process

Companies often have a Nomination and Remuneration Committee that evaluates potential candidates for appointment as non-executive directors (NED) or independent directors.

- Each organisation may have its unwritten rules, priorities, and unique needs. Get some information from a trusted resource on company culture etc.

- Be prepared for interviews (board interactions) and discussions regarding your vision and understanding of the role.

Step 9: Continuous Learning about Compliance changes

- Once appointed, stay updated with changes in laws and best practices in corporate governance.

- Adhere to ethical standards and compliance requirements as an independent director.

Step 10: Engage in Board Meetings and Contribute Effectively

- Participate actively in board meetings, offer objective viewpoints, and contribute to strategic decision-making.

- Uphold the interests of all stakeholders, including minority shareholders.

Step 11: Stay Updated

- Conflicts of Interest: Be vigilant about potential conflicts of interest and maintain independence in your judgments and decisions.

- Digital Dexterity: Develop digital dexterity and learn AI-based tools.

Corporate knowledge and trends: It is useful to read magazines and newsletters like Board Stewardship, IoD, and IICA newsletters to stay up-to-date with new developments and trends.

For more details, visit our Founder’s website or you may write to him at amit@dramitnagpal.com

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Brief Profile

Dr Amit Nagpal is a personal branding coach and storytelling coach with a special interest in brand storytelling, data storytelling, and social media marketing through storytelling. He has more than two and a half decades of experience as a teacher and practitioner of brand management and media marketing including television, print, and digital/new media.

He has co-authored the Amazon bestseller, Personal Branding, storytelling and beyond”. He believes “Digital is Magical” and stories are the most powerful tool to build brands as well as bonds. He’s often sought after for his innovative techniques that blend traditional wisdom with modern research and trends in storytelling.

You may write to him at amit@dramitnagpal.com