CII suggests limiting liability on independent directors

New Delhi, March 14 : Government should limit and streamline liability on independent directors, said the Confederation of Indian Industry (CII) on Sunday in a statement.
In a statement, the industry body said that liability of an independent director under the Companies Act may be limited to the extent of such contraventions and defaults, which are committed by the company with the knowledge or consent of the said independent director.
“It is necessary to expressly exempt independent directors from vicarious criminal liability since they are not involved in the day-to-day running of the company,” it said.
CII added that a non-obstante clause may be incorporated in the Act to exclude independent directors from any vicarious criminal liability for offences committed by the company.
The Centre recently concluded the exercise of decriminalising the Companies Act, 2013. CII recently submitted a paper to the Ministry of Corporate Affairs highlighting matters with respect to framework for settlement of offences, liability of independent directors, vicarious liability, impact of Covid-19 pandemic among others.
Noting that the government has enhanced in-house adjudication of penalties in respect of certain offences, it suggested that the mechanism be extended to additional provisions which involve technical lapses.