The inclusion of independent directors on corporate boards has been considered to be an effective mechanism to reduce the potential divergence between corporate management and shareholders. There is an increasing attention on and expectation from independent directors, by both the regulators and the investing public. This study empirically establishes the professional belief in board independence. The factor analysis suggests that the independent directors bring brand credibility and better governance, contribute to effective board functioning, and lead the governance committees effectively. Further, the survey confirms two major recommendations of the Irani Committee that only one-third of the board should be independent, and nominees should not be taken as independent directors. The paper highlights the need for a formal process of the appointment and periodic evaluation. Corporate governance and independent directors are thus no longer seen as boardroom intrusions but as healthy engines of soft power and corporate wealth.

The inclusion of the independent directors on corporate boards are considered to be an effective mechanism to reduce the potential divergence between corporate management and shareholders. This is why, attention and expectation on independent directors both from regulators and investing public. Implementation of clause 49 of listing agreement on Corporate Governance in 2001 has sparked off huge hunt for independent directors. Even though the listed companies were quick to restructure their boards according to the required legislation, the questions of having an independent board remained unanswered. The problem at this stage is that, for a long time, managements have viewed independent directors with a wink and a nod. Chief Executive Officers of many American companies get scared of facing probing questions raised by the independent directors. However, such instances are rare in India where independent directors have stood up for the rights of minority shareholders.