Regulatory Framework: Liability of Independent Directors

Affluence Advisory | Last updated: 22 March 2023

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Independent directors' liability is governed by Regulation 25(5) of SEBI LODR and Section 149(11) of the Companies Act, 2013. Directors can be held accountable for a listed entity's omissions or commissions if they were aware of the act, consented to it, or failed to act diligently. Recent amendments place more responsibility on independent directors, particularly regarding related party transactions. Ultimately, liability depends on the specific facts of each case, emphasising the need for diligent performance of duties.

Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements), Regulations, 2015 [SEBI LODR] Regulation 25(5) of SEBI LODR states as follows, An independent director shall be held liable, only in respect of such acts of omission or commission by the listed entity which

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