An increasing number of independent directors (IDs) are exiting corporate boards, triggered by a combination of rising regulatory pressures, heightened compliance demands, and growing fears of being implicated in corporate misconduct. Recent data from Prime Database indicates a noticeable spike: as many as 12 independent directors resigned from technology companies during the financial year ending March 2025, compared to just one in the previous year and two in FY 2023.
Overall, the last fiscal year saw 549 voluntary cessations of independent directors (excluding retirements or completion of term). Since January 2025 alone, 154 resignations have been recorded till April 22, according to Pranav Haldea, Managing Director of Prime Database Group. While “preoccupation” and “personal reasons” continue to be the most cited causes, experts suggest deeper factors are at play.
“There’s an increasing sense of caution among board members. Legal risks are intensifying, and independent directors now realize they cannot afford to be passive participants,” a corporate governance analyst commented.
Rising Expectations and the Erosion of Comfort Zones
Historically viewed as a prestigious post-retirement engagement, the role of an independent director today demands rigorous diligence, active engagement, and specialized competencies. Milind Sarwate, founder of Increate and currently serving on boards such as Asian Paints, Mahindra Finance, CEAT, Nykaa, and Hexaware, emphasized:
“The independent director’s role today is not ceremonial. It demands serious diligence, independence, and ongoing responsibility. Familiar networks alone are not enough to navigate the governance demands of modern corporations.”
Shriram Subramanian, Founder of InGovern Research, echoed this sentiment:
“Independent directors need to upskill, probe deeper, and truly understand company operations — not merely attend board meetings to endorse pre-approved agendas.“
The expectation now extends beyond providing oversight. If a promoter is uncooperative or involved in wrongdoing, IDs are expected to raise red flags or even escalate matters externally, a move that few are willing to risk.
Fear of Liability and Opportunistic Exits
The growing climate of fear surrounding corporate failures has made board positions less attractive. Many directors, when faced with allegations of corporate misgovernance, have chosen to resign under the pretext of “personal reasons,” leaving companies vulnerable during critical times.
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The case of Gensol Engineering illustrates the trend vividly. Following action by SEBI against the company and its promoters over alleged financial irregularities, three independent directors — Arun Menon, Harsh Singh, and Kuljit Singh Popli — resigned in quick succession, each citing personal reasons. The timing of their departures has raised questions about the board’s commitment and effectiveness.
Corporate governance experts stress that only a small minority resign due to genuine disagreements or ethical objections. Most departures are viewed as self-preservative moves to avoid personal liability or reputational harm.
“A watchdog has its limits,” Sarwate added. “When failures arise, independent directors often become scapegoats despite having limited executive authority.”
The mass resignations of independent directors spotlight a major stress test for India’s corporate governance framework. As regulatory scrutiny tightens, merely lending a reputable name to a company’s board is no longer sufficient. A cultural shift toward active participation, professional skepticism, and greater accountability is essential — not just for protecting personal reputations, but also for restoring public trust in the governance of India’s corporations.