SEBI has confirmed that cousins are not classified as 'relatives' under the Companies Act or LODR Regulations, permitting cousins of promoter-group members to be appointed as Independent Directors under specified conditions.
SEBI Allows Cousins as Independent Directors
The Securities and Exchange Board of India (SEBI) has clarified that cousins do not fall within the statutory definition of ‘relatives’ under the Companies Act and the Listing Obligations and Disclosure Requirements (LODR) Regulations. This ruling allows cousins of members from the promoter group to be eligible for appointment as Independent Directors, provided they meet other necessary qualifications.
This clarification aims to facilitate a broader pool of candidates for companies looking to diversify their boards while adhering to independence standards set forth in corporate governance regulations.
Legal practitioners in corporate governance should advise clients on the implications of this ruling, especially concerning board composition and the appointment of Independent Directors. The increased eligibility criteria may enhance the governance framework within companies and help in attracting qualified directors from diverse backgrounds.
Citations
- SEBI Clarification (2026) Companies Act
