what is an independent director and how does this differ from a non-.pdf

what is an independent director and how does this differ from a non-executive director? What are
the advantages of independent directors ?
Solution
An independent director is a non-executive director who does not have any pecuniary
relationship with the company, its promoters, senior management or affiliate companies, is not
related to promoters or the senior management.
An independent director is a non-executive director of a company and helps the company in
improving corporate credibility and governance standards. Independent directors act as a guide
to the company. Their roles broadly include improving corporate credibility and governance
standards functioning as a watchdog, and playing a vital role in risk management.
Difference between independent director and non executive director- Non Executive Directors
are the directors who are not in the employment of the company they do not involved in the day-
to-day running of business but monitor the executive activity and contribute to the development
of strategy.Independent Directors are those non executive directors who apart of receiving
directors\' remuneration, does not have any material pecuniary relationship or transaction with
the company or its promoters.
Advantages of independent directors
(1) Expertise not within the firm’s core competency
(2) Provide viewpoints without vested interest
(3) Formality leading to a more professional board environment
(4) Credibility to outside stakeholders.

1. what is an independent director and how does this differ from a non-executive director? What are
the advantages of independent directors ?

Solution

An independent director is a non-executive director who does not have any pecuniary
relationship with the company, its promoters, senior management or affiliate companies, is not
related to promoters or the senior management.
An independent director is a non-executive director of a company and helps the company in
improving corporate credibility and governance standards. Independent directors act as a guide
to the company. Their roles broadly include improving corporate credibility and governance
standards functioning as a watchdog, and playing a vital role in risk management.
Difference between independent director and non executive director- Non Executive Directors
are the directors who are not in the employment of the company they do not involved in the day-
to-day running of business but monitor the executive activity and contribute to the development
of strategy.Independent Directors are those non executive directors who apart of receiving
directors\' remuneration, does not have any material pecuniary relationship or transaction with
the company or its promoters.

Advantages of independent directors
(1) Expertise not within the firm’s core competency
(2) Provide viewpoints without vested interest
(3) Formality leading to a more professional board environment
(4) Credibility to outside stakeholders