Schedule IV: The Code for Independent Directors, Part by Part

Schedule IV explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.

Schedule IV is short — eight parts, a few pages — and Section 149(8) makes it binding on the company and the independent director both.

Parts I to III describe the job. Parts IV to VIII describe the machinery: how you're appointed, how you're re-appointed, what happens when you leave, the meeting you hold without management, and how you're evaluated. It's the second half that most companies handle badly, because it contains obligations on the company that nobody reads until something goes wrong.

I — professional conduct, including a duty to tell the board immediately if you lose independence. II — role and functions. III — thirteen duties, including outside professional advice at company cost and minuted dissent. IV — appointment must be approved in general meeting, justified in the explanatory statement, and formalised in a letter of appointment that goes on the website. V — re-appointment on the basis of the performance evaluation report. VI — resignation and replacement. VII — one separate meeting a year. VIII — evaluation by the whole board, excluding the director being evaluated.

Parts I–III: conduct, role, duties

Part I — Guidelines of professional conduct. Uphold integrity and probity. Act objectively and constructively. Act bona fide in the company's interest. Devote sufficient time and attention. Don't allow extraneous considerations to vitiate your independent judgement, whether concurring in or dissenting from the board's collective judgment. Don't abuse the position. Refrain from anything that would cost you your independence — and where circumstances arise that make you lose independence, inform the board immediately. Assist the company in implementing best governance practice.

Part II — Role and functions. Independent judgement on strategy, performance, risk, resources, key appointments and standards of conduct. Objective evaluation of board and management performance. Scrutiny of management against agreed goals. Satisfying yourself on the integrity of financial information and the robustness of controls and risk systems. Safeguarding all stakeholders, particularly minority shareholders. Determining remuneration of executive directors, KMP and senior management, and taking a prime role in their appointment and, where necessary, removal. Moderating between management and shareholder interests.

Part III — Duties. Thirteen of them. The ones that matter most in practice: take outside professional advice at the company's expense where necessary; insist that unresolved concerns are recorded in the minutes; ensure adequate deliberation on related party transactions; verify the vigil mechanism functions and doesn't prejudice users; report unethical behaviour or suspected fraud; and don't disclose confidential information.

Part IV: the manner of appointment

This is the part companies most often fall short on. Schedule IV requires four things.

1. Approval in general meeting. The appointment of an independent director shall be approved by the company in general meeting. Board approval alone isn't sufficient — for any company, listed or not.

2. A justified explanatory statement. The explanatory statement attached to the notice must state that, in the opinion of the Board, the proposed independent director fulfils the conditions specified in the Act and is independent of the management.

A statement that simply names the person and lists their qualifications doesn't do this. The board is required to form and record an opinion on independence, and the notice is where shareholders see it.

3. A formal letter of appointment, setting out:

4. Publication. The terms and conditions of appointment must be open for inspection at the registered office during business hours, and posted on the company's website.

Since the letter ends up public, treat it as a document a regulator may read. It's also the appointee's last clean opportunity to negotiate D&O cover, indemnity and access to independent advice.

Part V: re-appointment

One sentence, and it's more demanding than it looks: re-appointment shall be on the basis of the report of performance evaluation.

So the evaluation in Part VIII isn't a governance ritual disconnected from consequences. It is the stated basis on which the board decides whether to propose a second term. A company that renews an independent director without an evaluation report to point to has skipped a step that Schedule IV treats as mandatory.

Part VI: resignation or removal

Resignation and removal follow Sections 168 and 169 — the general provisions for directors.

On a vacancy caused by resignation or removal, the company must appoint a replacement at the earliest, and no later than the immediate next board meeting or three months from the date of the vacancy, whichever is later.

There's a sensible carve-out: if the board still satisfies the independent director requirement without filling the vacancy, the replacement obligation doesn't apply. A board of nine with four independent directors that loses one still has three — comfortably above one-third — and doesn't have to rush.

A listed entity gets less room. Regulation 25(6) once used the same "whichever is later" formula, but the words "the immediate next meeting of the board of directors or" were omitted in 2021. For a listed entity the deadline is now a flat three months.

Part VII: separate meetings

At least one meeting in a financial year, with no non-independent directors and no members of management present. All independent directors are expected to attend.

Three prescribed agenda items: review the performance of non-independent directors and the board as a whole; review the performance of the chairperson, taking into account the views of executive and non-executive directors; and assess the quality, quantity and timeliness of the flow of information between management and the board.

The third item is the one with teeth. It's the designated place to say that board papers arrive too late to read, or that material matters are being handled verbally.

Part VIII: evaluation mechanism

The performance evaluation of an independent director is done by the entire Board of Directors, excluding the director being evaluated.

And the outcome has a purpose: on the basis of that evaluation report, it is determined whether to extend or continue the term of appointment.

Read Parts V and VIII together and the design is clear — evaluation drives re-appointment. In practice, evaluations that produce uniformly positive ratings for everyone tell the board nothing and give the re-appointment decision no basis at all.

Key takeaways

• Schedule IV binds both the company and the director, through Section 149(8).
• Losing independence must be reported by you, immediately.
• Outside professional advice at company cost and minuted dissent are the two clauses to memorise.
• General meeting approval is mandatory for every company, with a justified explanatory statement.
• The letter of appointment has prescribed contents and goes on the website.
• Re-appointment must be based on the performance evaluation report.
• Replacement: next board meeting or three months, whichever is later — unless the board still complies without it. Listed entities: three months flat.

Read next

• Duties of an Independent Director: Schedule IV Explained
• Separate Meeting of Independent Directors: Agenda, Quorum, Minutes
• Independent Director Appointment Letter: Format and Must-Have Clauses
• Evaluating an Independent Director: Parameters and a Ready Checklist

Law stated as on 5 September 2026. For listed entities, Schedule IV is read with SEBI's Regulation 25 — where they differ, the stricter requirement applies.