Corporate Law Bill May Tighten Independent Director Rules For Lawyers & Consultants

Lawyers and management consultants serving as Independent Directors could face tighter eligibility rules under the proposed Corporate Laws (Amendment) Bill, 2026, if the government lowers the transaction threshold between their professional firms and the companies where they serve on Boards.

The Bill proposes replacing the existing fixed 10% threshold with “10% or such lower per cent”, allowing the government to prescribe a lower limit through rules. Under the current Companies Act, 2013, a professional associated with a legal or consulting firm can become ineligible as an Independent Director if transactions between the firm and the company or its group entities reach 10% or more of the firm’s gross turnover. A lower threshold could increase the number of transactions affecting eligibility. Industry estimates indicate lawyers and management consultants hold around 15-20% of Independent Director positions in top listed Nifty 500 companies.

The proposed changes also require Directors to continue meeting independence conditions throughout their tenure.