Why independent directors are effective in looking after interest of shareholders? They are government nominated They do not have personal interest in the affairs of the company They are highly qualified They are independent of locality
Question
Why independent directors are effective in looking after interest of shareholders? They are government nominated They do not have personal interest in the affairs of the company They are highly qualified They are independent of locality
Solution
Independent directors are effective in looking after the interest of shareholders primarily because they do not have personal interest in the affairs of the company. This means they can make unbiased decisions that are in the best interest of the shareholders, rather than decisions that might benefit them personally.
In addition, they are often highly qualified individuals with a wealth of experience and knowledge, which enables them to make informed decisions that can benefit the company and its shareholders.
Their independence also extends to their location, meaning they are not influenced by local politics or issues that could potentially sway their decision-making process.
While some independent directors may be government nominated, this is not a primary reason for their effectiveness in looking after the interest of shareholders. Their effectiveness comes from their ability to make impartial decisions based on their expertise and the best interest of the shareholders.
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