Regulation 25: The Independent Director's Own Regulation

Regulation 25 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.

If you sit on a listed board, Regulation 25 is the provision written specifically about you. Everything else in the LODR is about the company; this one is about your caps, your meeting, your protection and your exit.

It's short enough to read in ten minutes and most independent directors never have. Here it is, sub-regulation by sub-regulation.

7 listed entities maximum, 3 if you're a whole-time director or MD anywhere listed. No alternate directors for independent directors. Special resolution for appointment, re-appointment and removal, with a majority-of-the-minority fallback. One separate meeting a year. A liability shield mirroring Section 149(12). Vacancies filled within three months — stricter than the Companies Act. Familiarisation programme, disclosed. Annual declaration, whose veracity the board must assess. D&O insurance for the top 1,000. One-year cooling-off before an executive role in the group.

The directorship caps

A person shall not serve as an independent director in more than seven listed entities.

And if you're serving as a whole-time director or managing director in any listed entity, the cap drops to three independent directorships.

Two points that trip people up:

• The cap counts listed entities, not companies generally. Your unlisted public company directorships don't count here — though they do count towards the separate Section 165 limit of 20 companies, of which no more than 10 may be public.
• Since 2025, directorships in high-value debt listed entities are counted too. Boards that were comfortably inside the cap on an equity-only count may not be any more.

Regulation 26 adds the committee limits: a director may be a member of at most ten committees and chairperson of at most five, across all listed entities, counting only audit and stakeholders relationship committees.

No alternate directors. SEBI prohibits a listed entity from appointing an alternate director for an independent director. The role isn't delegable — which is the point.

Appointment, re-appointment and removal

Regulation 25(2A) requires appointment, re-appointment and removal of an independent director of a listed entity to be by special resolution.

Since the 2022 amendment, an alternate mechanism applies where that special resolution fails to get 75%. The resolution is still deemed passed if both:

• votes cast in favour exceed votes cast against; and
• votes cast by public shareholders in favour exceed those cast against.

An ordinary-majority test plus a majority-of-the-minority test. Where a director was appointed under this mechanism, the same threshold governs their removal.

This was a genuine fix. Under the pure special resolution requirement, appointments were failing not because shareholders objected but because turnout was low and a single institutional abstention could sink a 75% threshold.

The separate meeting and the liability shield

Regulation 25(3) and (4) require at least one meeting in a financial year of the independent directors alone — no non-independent directors, no management — to review the performance of non-independent directors and the board, review the chairperson, and assess the quality, quantity and timeliness of information flow between management and the board.

Regulation 25(5) is the LODR's own version of Section 149(12): an independent director is liable only in respect of acts of omission or commission by the listed entity that occurred with their knowledge, attributable through board processes, and with their consent or connivance, or where they had not acted diligently with respect to these regulations.

Same four-limb structure, same weak point. The diligence limb operates on its own, and the evidence for it is attendance, questions asked, and concerns recorded in the minutes.

Vacancies

Where an independent director resigns or is removed, the listed entity must appoint a replacement at the earliest, and not later than three months from the date of the vacancy.

This is stricter than the Companies Act, and the difference is easy to miss. Schedule IV Part VI gives an unlisted company the later of the immediate next board meeting or three months. Regulation 25(6) originally used the same formula — but the words "the immediate next meeting of the board of directors or" were omitted by the LODR (Third Amendment) Regulations, 2021. For a listed entity, the deadline is now a flat three months.

If your compliance calendar still says "next board meeting or three months, whichever is later" for a listed entity, it's running on the pre-2022 text.

Familiarisation

The listed entity must familiarise independent directors with the entity, their roles, rights and responsibilities, the nature of the industry, the business model, and so on — through programmes, with the details disclosed on the website and in the corporate governance report.

The disclosure usually reports cumulative hours. Two hours a year across all independent directors, disclosed year after year, tells a reader exactly how seriously the entity takes this.

If you're joining a listed board, ask what the familiarisation programme actually consists of before you accept. A good one includes site visits, sessions with business heads, and time with the auditors. A bad one is a slide deck.

The annual declaration — and the board's duty to check it

Regulation 25(8) requires an independent director to submit a declaration that they meet the criteria of independence and are independent of the management.

Regulation 25(9) is the part companies overlook: the board must take that declaration on record after undertaking due assessment of its veracity.

So the board can't just file it. Someone has to verify — against the register of related parties, the related party transaction records, the shareholding data and the entity's own knowledge of the director's other engagements. A board that takes declarations on record unexamined has a documented process failure if the independence later turns out to have lapsed.

D&O insurance and the exit cooling-off

Regulation 25(10) — the top 1,000 listed entities by market capitalisation must undertake directors' and officers' liability insurance for all their independent directors, of such quantum and for such risks as the board may determine. In force since 1 January 2022.

Regulation 25(11) — an independent director who resigns from a listed entity cannot be appointed as an executive or whole-time director of that entity, its holding, subsidiary or associate company, or any company in its promoter group, until one year has elapsed from the resignation.

Alongside this, a listed entity must disclose the resignation letter of an independent director with detailed reasons to the stock exchanges, together with the director's confirmation that there is no other material reason than those stated.

Those three provisions were introduced together in the 2021 amendment package that took effect on 1 January 2022, and they fit together: insure the director so they can afford to be difficult, publish their reasons if they leave, and stop the revolving door into an executive seat.

Key takeaways

• 7 listed entities, 3 if you're an executive director anywhere listed. HVDLE seats now count.
• No alternate director for an independent director.
• Special resolution for appointment and removal, with a majority-of-the-minority fallback.
• Regulation 25(5) mirrors Section 149(12) — and its diligence limb stands alone.
• Vacancy: three months flat for a listed entity — stricter than Schedule IV's "whichever is later."
• Regulation 25(9) requires the board to assess the veracity of your independence declaration.
• D&O insurance is mandatory for the top 1,000 since 1 January 2022.
• One year before you can take an executive role in the group.

Read next

• SEBI LODR Corporate Governance Requirements for Listed Companies
• How Many Listed Company Directorships Can One Person Hold?
• D&O Insurance Is Mandatory for the Top 1,000 Listed Companies
• Separate Meeting of Independent Directors: Agenda, Quorum, Minutes

Law stated as on 5 September 2026. SEBI amends the LODR several times a year — verify the current text of Regulation 25 before relying on any threshold or timeline here.