The Ministry of Corporate Affairs has issued a Circular dated 02 March 2020 directing that unnecessary prosecution of Independent Directors (“ID”) and Non-Executive Directors (“NED") should not be undertaken. It has clarified that:

• the liability for offences committed by a Company is ordinarily attributable to whole –time directors and key managerial personnel of the Company.
• IDs/NEDs should not be subjected to civil or criminal consequences for the lapses of the board of directors or committees, in the absence of evidence that the acts had occured with their knowledge, attributable through Board processes, and with his consent or he had not acted diligently.
• the responsibility for filing records, performing statutory compliances and maintaining proper corporate registers as per Companies Act 2013 will not fall on the IDs and NEDs.

This post has been contributed by Ms. Vaneesa Agrawal.

[DISCLAIMER:  This article is for academic purpose and is solely to provide readers with general information regarding developments in Indian law. The information contained herein does not constitute legal or a professional advice.]