What kind of questions will you be asked in your Independent Director interview?

Before we get into the topic for today’s mail, let’s take a quick minute to discuss who is eligible to become an independent director (ID). 

Section 149(6) of the Companies Act 2013 states that an independent director 

• Must be a person of integrity and possess relevant expertise and experience 
• Must not, either on his/her own or through his/her relatives, have had any pecuniary relationships with the company or its sister concerns in the current year or the previous 2 years                                                                                                                                                                                                                                                                                                                          

Also, Rule 5 of the Companies (Appointment and Qualification of Directors) Rules, 2014, states that an independent director must have appropriate skills, experience and knowledge in one or more fields of:

• Finance 
• Law
• Management 
• Sales
• Marketing
• Administration
• Research
• Corporate governance
• Technical operations or other disciplines related to the company’s business

In other words, if you have or have had, a successful professional career, possess relevant experience/expertise, have no material relationship with the company, and have passed the self-assessment test, you are qualified to serve as an independent director. 

Therefore, HR managers, legal experts, entrepreneurs, business leaders and retired professionals are all equipped to attempt the independent directors’ exam and serve in that capacity on the board of a listed or unlisted public company.

The minimum age for becoming an independent director is 21 years, though in practice IDs are much older than that.

There is a technical requirement as well. To be eligible for appointment as an independent director, you need to register your name in an independent directors’ database established by the MCA and IICA, and pass an exam called the self-assessment proficiency test organised by the Indian Institute of Corporate Affairs (IICA), within 12 months of getting registered. 

Certain categories of people are exempted from giving this exam: Lawyers, CAs, CS and cost accountants in practice for 10 years, and people who have already been directors of public companies that meet certain thresholds, or regulators in statutory corporations like SEBI, RBI etc. 

But even if you are technically exempted, it is always advisable to clear the exam. Before your appointment, in any interview with a company, you will be asked whether you have cleared the exam because it is an elementary test of your corporate governance skills.

Corporate leaders have had bitter experiences with many professionals who have 10 or more years of experience, but have no idea about corporate governance. They do not want to make mistakes by hiring the wrong people. They prefer to hire new directors who have cleared the exam rather than relying on exemption.

The interview 

So what would you typically be asked in an interview for an independent director position?

In any interview, the interviewer looks for the following: 

1. Whether you have knowledge about the company, its challenges, growth prospects and the industry 
2. Whether you possess any kind of expertise or experience which is relevant to the company
3. Can you unpack a complex problem into its granular components and have you done it before? Can you give concrete examples before the board?
4. How you deal with conflicts with other senior people and whether you have a previous track record of dealing with conflicts in a constructive way 
5. Do you have a moral compass and how do you bring up and deal with ethical issues

Here is a list of important questions that you may be asked during interviews for ID positions:

1. What do you know about our company and its business? How are we similar to, or different from, other players in the industry? 

2. What are the challenges that our business faces in the current stage and economic climate?

3. What do you think our key stakeholders, investors and clients expect from the board?

4. In what way will your past experience be relevant for us?

5. In the current climate, what do you see as the biggest challenges our business faces? How will you lend support to overcome them?

6. What defines the relationship between non-executive and executive personnel? What should the ideal relationship between executive and independent directors look like? What are the signs of a healthy relationship?

7. What do you see as the biggest threats to our organisation? And what measures will you implement to safeguard against them?

8. What key experiences, both professional and personal, do you believe will add value to our organisation?

9. How involved do you feel non-executive directors should be in informing overall business strategy?

10. Have you influenced change or challenged executives in the past? How did it go? 

11. What would you do if you identified red flags in the company’s governance? What would be the best way to bring the attention of the board to this?

12. What would your action plan be if the CEO/MD/Chairman does not pay adequate attention to the red flags?     

As you can probably tell, these questions cannot be answered just by preparing for interviews. You have to have the right kind of life experiences. If you build your brand the right way and follow the roadmap, answering these questions effectively will come naturally to you. 

Of course, you can practise mock interviews, but you cannot invent those experiences. But we can help you be thoroughly prepared – not just in terms of building your brand and track record, but down to how you can study for – and crack – the ID exam. 

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