SEBI clarifies that cousins are not considered 'relatives' under the Companies Act, enabling them to serve as independent directors in companies.
SEBI Rules Cousins Can Be Independent Directors
The Securities and Exchange Board of India (SEBI) recently clarified that, under the Companies Act and LODR Regulations, cousins do not fall within the statutory definition of 'relatives.' This ruling paves the way for cousins of promoter-group members to be eligible for appointment as independent directors.
This clarification assists companies in meeting the requirement for independent directors without being constrained by familial relationships that would typically involve closer relatives. By expanding the definition, SEBI aims to enhance the pool of candidates available for such important governance roles.
Legal practitioners and corporate entities should take note of this ruling as it expands eligibility criteria for independent directors and emphasizes the significance of corporate governance standards. Companies should ensure compliance with the remaining conditions for appointing independent directors in light of this development.
Citations
- SEBI Order (2026) SEBI 4
