Rising Scrutiny of Interlocking Directories in India: Corporate Governance Issues vs. Anti-Competitive Risks

Interlocking directorship refers to a person who is acting as a director on the board of multiple companies, that may have a competitive streak with one another in the market. Such kind of directors can pose as a threat to the transparency and accountability factor that is being established through laws for corporate governance and fair market competition. If a closer look is taken into the company law of India, The Companies Act, 2013 permits directors to hold multiple board positions and there is necessarily no explicit statutory prohibition on interlock between competing firms, provided the fiduciary duties are upheld by the person acting as a director. However, since interlock raise various corporate governance concerns such as conflict of interest, dilution of independence within board, and high risks at breach of fiduciary duties when directors juggle overlapping responsibilities for two competitive firms in the market, it becomes necessary to regulate the same. This article will try to focus on such posed risks of interlocking directories in India with a significant focus upon governance and competition risks and how they are being approached in recent Indian corporate and competition jurisprudence. Finally, how the regulation of these interlocking directories are necessary will be further discussed along with regulatory gaps and suggestions to reconcile this issue and uphold governance integrity with competition protection in a fair manner. Key words: Interlocking Directories, Corporate Governance, Board of Directors, Anti-competitive acts, Companies Act 2013, Competition Act 2002, Board of Directors.