In a recent interpretive letter issued under the SEBI (Informal Guidance) Scheme, 2025, Securities and Exchange Board of India (SEBI) addressed the scope of the phrase “not related to promoters or directors” under Regulation 16(1)(b)(iii) of the SEBI (LODR) Regulations, 2015.
The applicant, Maithan Alloys Limited, sought clarity on whether the cousin of a promoter group member, who was also a director in the company’s subsidiaries, would be regarded as a person “related” to such promoter/director for the purpose of determining eligibility for appointment as an Independent Director.
SEBI observed that a cousin is not covered within the definition of “relative” under Section 2(77) of the Companies Act, 2013, read with the Companies (Specification of Definitions Details) Rules, 2014 and Regulation 2(1)(zd) of the LODR Regulations. On the facts presented, Securities and Exchange Board of India (SEBI) indicated that the proposed appointee may be eligible to serve as an Independent Director.
The guidance is noteworthy because it reinforces that, in assessing independence under Regulation 16(1)(b)(iii), the analysis must be anchored to the statutory definition of “relative” rather than broader notions of familial association.
At the same time, SEBI reiterated that listed entities must independently verify compliance with all other eligibility and independence conditions prescribed under the LODR Regulations, the Companies Act, 2013 and the rules framed thereunder.
Copy of the Informal Guidance issued by SEBI is attached.