1. Check — Is an Independent Director legally required?
Based on Section 149(4) of the Companies Act, 2013, read with the Companies (Appointment and Qualification of Directors) Rules, 2014.
Caution: Inputs of paid-up capital, turnover, and aggregate outstanding loans are being considered as an initial determining factor only, to guide the prospective Director using this guidance tool. They are not a substitute for a formal statutory-threshold check by a practising company secretary.
2. Assess — Does this appointment protect you?
Three hard stops first, then a seven-question protection check across three risk categories. Answer honestly, there's no submission involved.
Hard stops
A "yes" to any of these is a statutory disqualification or a direct conflict, not a matter of degree. It should end the conversation, or at minimum be resolved, before anything else here matters.
A. Are you an employee, partner, or proprietor of the firm that introduced you to this opportunity, and has that firm billed this company or its group 10% or more of its own annual turnover in the last three financial years?
Legal basis: Section 149(6)(e)(ii)(B), Companies Act, 2013 — a director is not "independent" if they are, or in the preceding three financial years were, an employee, proprietor, or partner of a legal or consulting firm that has had transactions with the company (or its holding/subsidiary/associate) amounting to 10% or more of that firm's gross turnover.
B. Has the introducing firm offered you, or discussed with you, any referral fee, placement bonus, or share of their fee for this placement?
Legal basis: Section 149(6)(c), Companies Act, 2013 — an independent director must have no pecuniary relationship with the company (other than director's remuneration and permitted transactions) in the two preceding financial years or the current one. A referral or placement fee tied to the appointment is such a pecuniary relationship.
C. Are you currently providing, or being asked to provide, any paid consulting or advisory work to this company or its group alongside the board seat?
Legal basis: Section 149(6)(c), read with Section 184(1) (disclosure of concern or interest), Companies Act, 2013 — paid advisory work alongside the directorship is a pecuniary relationship that compromises the statutory independence test, and must in any event be disclosed to the board.
1. Do you know exactly what your introducer's relationship to the company is (not an auditor, existing director, or anyone who personally benefits from your appointment)?
Why this matters: Section 2(76), Companies Act, 2013 defines "related party" — if your introducer falls within that definition, or is a person described under Section 149(6) as disqualifying an independent director's status, their reassurance is an interested one, not a neutral one, and needs independent verification.
2. Has the statutory need for an Independent Director at this company been checked independently, rather than taken on trust?
Why this matters: Section 149(4), Companies Act, 2013, read with Rule 4 of the Companies (Appointment and Qualification of Directors) Rules, 2014 — the paid-up capital, turnover, and borrowing thresholds in Section 1 above determine whether this is a genuine compliance requirement, not something you should take solely on the introducer's word.
3. Have you seen the company's latest audited financial statements?
Why this matters: Section 166(3), Companies Act, 2013 requires a director to exercise reasonable care, skill, and diligence — which is difficult to demonstrate if you accepted the appointment without reviewing the financials you'll be accountable for.
4. Is your remuneration figure confirmed in writing, not just discussed verbally?
Why this matters: Section 149(9), Companies Act, 2013 — an Independent Director may only receive sitting fees and, if approved, a profit-linked commission; stock options are not permitted. Get the agreed figure in writing so there's no ambiguity against this statutory ceiling.
5. Has a formal Letter of Appointment been issued to you, ahead of any ROC filing (e.g. DIR-12) that puts you on public record?
Why this matters: Schedule IV (Code for Independent Directors) to the Companies Act, 2013 requires a formal letter of appointment. Filing your consent (DIR-2) and the company's DIR-12 with the Registrar under Section 152 read with Section 170 puts your name on public record — the letter should exist before that happens, not after.
6. Does that letter include indemnity protection or a reference to statutory limitation of liability?
Why this matters: Section 149(12), Companies Act, 2013 limits an Independent Director's liability to acts of omission or commission that occurred with their knowledge, attributable through board processes, and with their consent or connivance, or where they failed to act diligently. Your appointment letter should reflect this statutory protection explicitly.
7. Is there a dated commitment for Directors & Officers (D&O) insurance cover, even if it's not in place on day one?
Why this matters: SEBI (LODR) Regulations, 2015, Regulation 25(10) mandates D&O insurance for independent directors of certain listed companies above a market-capitalisation threshold set by SEBI from time to time — confirm current applicability with your company secretary. Even where not mandatory, it's a reasonable protection to ask for in writing.
The Independent Director Pre-Appointment Check · rohitsahai.com/id-toolkit
3. Protect & Negotiate — templates to hold your ground
The wording and formats used to hold this ground in a real negotiation, adapted for general use. No email required. Each is available as plain text (to paste straight into WhatsApp or email) or as a formatted, branded PDF to keep or print.
Appointment-letter-first message
A short message requesting the formal letter before signing any ROC filing.
Document-destruction request
What to send if an appointment doesn't proceed and you want your ID documents disregarded.
Due-diligence checklist
The hard stops and protection checks behind the verdict above, as a reference sheet.
Document-sharing tracker
A log for every time you share DIR-2, DIR-8, or ID documents with a prospective board. Formatted Excel file, ready to fill in.
Graceful decline message
A short, warm way to say no without closing the door, when the terms aren't right.
Financial red-flags checklist
What to look for in the balance sheet and auditor's report before you agree to anything.
Governance & promoter due-diligence checklist
Beyond the legal checks above: promoter background, litigation history, board composition, and where to look — including paid MCA filings for a proper deep-dive.