SEBI Clarifies Cousin Can Be Appointed as Independent Director

Issue No. I/6076/2026, Dated: 02.03.2026

The Securities and Exchange Board of India (SEBI) has issued informal guidance clarifying whether a cousin of a promoter or director would be regarded as a person “related to promoters or directors” under Regulation 16(1)(b)(iii) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR Regulations).

The clarification was issued in response to a query raised by a company regarding eligibility for appointment as an Independent Director.

1. Query Raised Before SEBI

The company sought guidance on whether a cousin of a promoter or director would fall within the category of persons related to promoters or directors and consequently be disqualified from appointment as an Independent Director under the independence criteria prescribed in the LODR Regulations.

2. Cousin Not Covered Within Definition of “Relative”

SEBI clarified that a cousin is not included within the definition of “relative” under:

• The Companies Act, 2013; and
• The SEBI (LODR) Regulations, 2015

Accordingly, a cousin of a promoter or director is not automatically regarded as a person related to promoters or directors merely by virtue of such relationship.

3. Eligibility for Appointment as Independent Director

Based on the above interpretation, SEBI clarified that a cousin of a promoter or director may be eligible for appointment as an Independent Director.

The relationship of cousinship, by itself, would not constitute a disqualification under the relevant independence criteria.

4. Subject to Fulfilment of Other Eligibility Conditions

SEBI has emphasised that eligibility would remain subject to compliance with all other applicable conditions prescribed under:

• The Companies Act, 2013;
• The SEBI (LODR) Regulations, 2015; and
• Other applicable provisions governing appointment and independence of directors.

Accordingly, the proposed appointee must satisfy all other independence and eligibility requirements before being appointed as an Independent Director.

5. Significance of the Clarification

The guidance provides interpretational clarity regarding the scope of relationships that may affect independence under the corporate governance framework.

It confirms that relationships not covered within the statutory definition of “relative” are not automatically treated as disqualifying relationships for purposes of determining eligibility as an Independent Director.

6. Objective of the Clarification

The clarification seeks to provide certainty in the application of independence criteria under the LODR Regulations and ensure consistency in interpretation of the term “related to promoters or directors” while assessing eligibility for appointment as Independent Directors.

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