SEBI Clarifies Cousins Of Promoters Can Qualify As Independent Directors

The Securities and Exchange Board of India (SEBI) has clarified that the cousins of Promoters or Directors will not be classified as “related” persons under existing listing regulations, making them eligible for appointment as Independent Directors if they meet all other legal requirements.

The clarification was issued in response to a request from Maithan Alloys seeking guidance on whether a promoter-group member’s cousin could be considered independent under Regulation 16 of the Listing Obligations and Disclosure Requirements (LODR) Regulations. SEBI stated that the assessment depends on the legal definition of “relative” under the Companies Act and LODR rules. The definition covers immediate family members such as spouses, parents, children, and siblings, but does not extend to cousins.

Based on the facts presented, the regulator indicated that such a candidate could be considered for an independent directorship, subject to compliance with other independence norms, including restrictions on shareholding and financial relationships with the company.