1. Index
- Executive Summary
- Background and Evolution of Independent Directorship in India
- Regulatory and Legal Framework Governing Boards
- Problem Statement: The Independent Director Paradox
- Scale, Trends, and Patterns of Independent Director Exits
- Root Causes of the Exodus: A Multi‑Dimensional Analysis
- Industry‑Specific Deep Dives
7.1 Banking and NBFC Sector
7.2 Infrastructure and Capital‑Intensive Industries
7.3 Technology, Digital, and New‑Age Companies
7.4 Family‑Owned and Promoter‑Led Enterprises - Legal, Reputational, and Personal Risk Landscape for Independent Directors
- Impact on Corporate Governance, Capital Markets, and Investor Confidence
- In‑Depth Solutions and Systemic Reforms
- Emerging and Future‑Ready Avenues for Independent Directors
- Recognition, Incentives, and the Evolving Social Contract
- Recommendations
- Conclusion
- References
2. Executive Summary
Independent directors were introduced into the Indian corporate governance framework as a corrective mechanism to address concentrated ownership, promoter dominance, and weak minority shareholder protection. Over time, however, the role has transformed from a position of strategic oversight and moral authority into one of heightened legal exposure and constrained influence. In the post-pandemic period, India has witnessed a sharp and persistent rise in independent director exits, particularly mid-term resignations, cutting across sectors and company sizes.
This report presents a comprehensive, India-focused, board-level analysis of why independent directors are exiting in large numbers, why this trend represents a systemic governance risk, and how it can be reversed. The report argues that the churn is not driven by individual inadequacy but by a structural imbalance between accountability and authority. Independent directors today face expanding regulatory scrutiny, criminal and civil liability risk, reputational damage, and personal stress, while lacking commensurate access to information, decision rights, or cultural empowerment within boards.
Through detailed sectoral chapters covering banking and NBFCs, infrastructure, technology and new-age companies, and family-owned enterprises, this report demonstrates how governance stress manifests differently across industries. Drawing on regulatory developments, judicial precedents, high-profile corporate failures, and academic research, it proposes a multi-layered reform agenda encompassing legal safe harbors, boardroom culture reform, professionalization of directorship, enhanced information rights, compensation restructuring, and institutional recognition mechanisms.
Ultimately, the report concludes that unless independent directorship is rebalanced and re-legitimized, India risks hollowing out one of the most critical pillars of its corporate governance architecture. Conversely, if reforms are undertaken with intent and urgency, independent directors can emerge as central architects of sustainable value creation, ethical capitalism, and long-term institutional trust.
3. Background and Evolution of Independent Directorship in India
3.1 Pre-Reform Era and the Promoter-Centric Board
Prior to the liberalization of the Indian economy and the emergence of modern capital markets, corporate boards were largely extensions of promoter control. Boards were dominated by founders, family members, and close associates, with limited separation between ownership and management. Minority shareholder protection was weak, disclosures were minimal, and external oversight mechanisms were underdeveloped.
The Harshad Mehta scam of the early 1990s and later the Ketan Parekh episode exposed deep vulnerabilities in India’s corporate and financial governance. These events triggered a broader debate on transparency, accountability, and the need for independent oversight.
3.2 Clause 49 and the Formalization of Independence
The introduction of Clause 49 of the Listing Agreement in the early 2000s marked the first serious attempt to institutionalize independent directors in India. Clause 49 mandated minimum proportions of non-executive and independent directors, audit committees, and basic governance disclosures. While compliance improved on paper, the spirit of independence often lagged behind.
3.3 Companies Act, 2013 and SEBI LODR: Expansion of Accountability
The Companies Act, 2013 fundamentally altered the governance landscape by codifying directors’ duties, expanding the definition of stakeholders, and introducing explicit liability provisions. SEBI’s LODR Regulations further tightened board composition norms, disclosure requirements, and evaluation mechanisms. Together, these reforms elevated the expectations placed on independent directors, while simultaneously increasing their exposure to enforcement actions.
4. Regulatory and Legal Framework Governing Boards
4.1 Statutory Duties under the Companies Act, 2013
Section 166 of the Companies Act imposes fiduciary duties on all directors, including independent directors. These include acting in good faith, exercising due care and diligence, avoiding conflicts of interest, and refraining from undue gain. Importantly, the law does not distinguish between executive and non-executive directors when assigning core fiduciary responsibility.
4.2 SEBI LODR Regulations and Continuous Disclosure
SEBI’s LODR framework mandates detailed disclosures relating to board composition, committee functioning, attendance, and evaluation. Independent directors are required to meet separately, evaluate management performance, and provide oversight on related-party transactions. Failure to ensure compliance can result in penalties, reputational damage, and regulatory action.
4.3 Sector-Specific Governance Overlays
In regulated sectors such as banking, NBFCs, insurance, and infrastructure finance, directors face additional layers of compliance imposed by regulators like RBI and IRDAI. Fit-and-proper criteria, approval requirements, and enhanced supervisory scrutiny significantly increase the burden on independent directors in these sectors.
5. Problem Statement: The Independent Director Paradox
The independent director paradox lies in the expectation that directors should be fully accountable for governance outcomes without being fully empowered to influence them. Independent directors do not control management, do not have executive authority, and rely heavily on information supplied by the very management they are expected to oversee.
This paradox is exacerbated by retrospective enforcement, where decisions are judged with the benefit of hindsight, and by cultural norms that discourage dissent. The result is a role that is high on risk, low on control, and increasingly unattractive to capable professionals.
6. Scale, Trends, and Patterns of Independent Director Exits
6.1 Quantitative Trends
Post-pandemic data indicates a significant rise in independent director resignations, particularly mid-term exits. Small and mid-cap companies account for a disproportionate share of these exits, reflecting weaker governance frameworks and higher promoter dominance.
6.2 Qualitative Patterns
While resignation letters frequently cite personal reasons, proxy advisory firms and governance experts identify recurring themes: audit disagreements, concerns over disclosures, fear of regulatory scrutiny, and lack of board effectiveness.
7. Root Causes of the Exodus: A Multi-Dimensional Analysis
The exit of independent directors from Indian corporate boards is not attributable to a single trigger. Instead, it is the cumulative result of multiple, reinforcing stressors that have fundamentally altered the risk–reward equation of board service. These root causes operate at regulatory, institutional, cultural, economic, and personal levels.
7.1 Escalating Regulatory and Enforcement Intensity
Over the last decade, Indian regulators have transitioned from a disclosure-driven governance model to an enforcement-led one. SEBI, SFIO, ED, RBI, and state authorities increasingly pursue board members as part of investigations into corporate failures, frauds, and compliance lapses. Independent directors are often summoned not because of direct involvement, but because of their formal oversight role. The burden of responding to investigations, attending hearings, and facing prolonged uncertainty acts as a powerful deterrent.
Importantly, enforcement actions are frequently retrospective. Decisions taken in good faith under incomplete information are judged years later with the benefit of hindsight. This retrospective lens erodes confidence in the business judgment rule and creates a perception that independent directors are exposed to unbounded liability.
7.2 Information Asymmetry and Governance Blind Spots
Independent directors are structurally dependent on management-provided information. While laws presume access to all material facts, the reality is that information flow is curated, summarized, and often sanitized. In complex organizations, especially those with multiple subsidiaries or offshore structures, it is virtually impossible for non-executive directors to independently verify operational or financial data.
This asymmetry creates governance blind spots. When failures surface, independent directors are questioned on why risks were not detected earlier, even though they lacked direct operational visibility. The mismatch between expectation and capability is a central driver of exits.
7.3 Audit Committee Pressure and Financial Reporting Risk
Audit committees have become focal points of regulatory scrutiny. Independent directors serving as audit committee chairs face heightened exposure, particularly in cases involving accounting restatements, revenue recognition issues, or related-party transactions. The growing complexity of accounting standards, combined with aggressive financial engineering in certain sectors, has made audit oversight an increasingly specialized and high-risk function.
7.4 Promoter Dominance and Cultural Resistance
Despite regulatory mandates, many boards continue to operate within promoter-centric cultures. Strategic decisions are often pre-determined outside the boardroom, leaving little scope for genuine deliberation. Independent directors who challenge assumptions or question transactions may face subtle resistance, exclusion from informal discussions, or reputational marginalization.
Over time, such environments lead to disengagement. For experienced professionals, resignation becomes a rational response to avoid being complicit in decisions they cannot meaningfully influence.
7.5 Compensation, Time Burden, and Opportunity Cost
Independent director compensation in India remains modest compared to global standards and to the scale of responsibility involved. Sitting fees and commissions rarely reflect the time commitment required for meetings, committee work, regulatory compliance, and crisis management. As board roles become more demanding, the opportunity cost of serving increases, particularly for professionals with alternative career or advisory options.
7.6 Psychological and Reputational Stress
Beyond legal risk, independent directors face psychological stress arising from media scrutiny, public criticism, and fear of reputational damage. Even unfounded allegations can have long-lasting consequences for professional standing. This intangible cost is increasingly factored into decisions to step down.
8. Industry-Specific Deep Dives
The challenges, risks, and expectations faced by independent directors vary sharply across industries. Sector-specific business models, regulatory intensity, ownership structures, and capital allocation patterns shape the governance environment and determine both the effectiveness and vulnerability of independent directors. This section provides a deep, industry-wise examination of how and why independent directors experience stress, disengagement, and eventual exit in different segments of Corporate India.
8.1 Banking and NBFC Sector
The banking and non-banking financial services (NBFC) sector is the most heavily regulated and scrutinized segment of the Indian economy. Independent directors in banks and NBFCs operate under continuous oversight from the Reserve Bank of India, SEBI, and, in stressed situations, multiple investigative agencies. Boards are expected to understand and oversee highly complex domains such as credit risk, liquidity management, asset–liability mismatches, treasury operations, capital adequacy, provisioning norms, and systemic contagion risks.
The Yes Bank crisis represents a defining moment for independent directors in Indian banking. During its rapid growth phase, the bank aggressively expanded corporate lending to highly leveraged business groups. Despite the presence of several reputed independent directors and committees, risk concentration increased sharply. When the crisis unfolded in 2019–2020, regulatory action extended beyond executive management to the board. Independent directors were questioned on why early warning signals were not acted upon, why stress recognition was delayed, and whether the board exercised sufficient skepticism over management projections. The episode fundamentally altered perceptions of board immunity and triggered a wave of resignations across banking and NBFC boards.
NBFCs present even greater governance complexity. Entities such as IL&FS, DHFL, and PMC Bank exposed how opaque group structures, layered subsidiaries, cross-guarantees, and related-party lending can overwhelm traditional board oversight mechanisms. Independent directors in NBFCs are expected to understand intricate funding structures, wholesale market dependence, and regulatory arbitrage strategies. Following these failures, many experienced professionals exited NBFC boards, citing an untenable combination of regulatory risk, information opacity, and reputational exposure.
8.2 Infrastructure and Capital-Intensive Industries
Infrastructure companies operate under fundamentally different governance conditions. These businesses involve long-gestation projects, heavy leverage, political interfaces, and multi-decade regulatory risk. Boards must oversee project execution, contract management, funding structures, and counterparty risk across extended time horizons. Independent directors are frequently expected to evaluate decisions involving massive capital commitments despite limited sector-specific technical expertise.
The collapse of IL&FS remains the most instructive governance failure in this sector. The group’s board presided over a complex web of subsidiaries with opaque inter-company transactions and hidden leverage. Even diligent independent directors struggled to obtain a consolidated view of risk exposure. When defaults surfaced, the government superseded the entire board and appointed a new one. This intervention shattered the assumption that formal compliance and reputational stature could shield independent directors from systemic failure.
Beyond IL&FS, infrastructure sectors such as power generation, renewable energy, roads, ports, and urban infrastructure face persistent governance stress. Tariff uncertainty, delayed payments from state utilities, changing environmental norms, and political risk create volatility that boards must continuously manage. Independent directors increasingly assess infrastructure boards through a risk lens, often declining appointments unless governance systems and information flows are demonstrably robust.
8.3 Technology, Digital, and New-Age Companies
Technology and digital companies introduce a distinct governance paradox. Founder-driven cultures prioritize speed, innovation, and valuation growth, often viewing governance as a post-facto compliance exercise rather than a strategic asset. Independent directors are frequently inducted late in the corporate lifecycle, primarily in preparation for public listing or regulatory compliance.
Governance conflicts in this sector commonly arise around related-party transactions, ESOP structures, revenue recognition practices, customer data usage, and disclosure quality. Independent directors are often placed in the difficult position of balancing entrepreneurial freedom with fiduciary discipline. In several prominent start-ups, independent directors have resigned after disagreements over disclosure standards, valuation assumptions, or capital allocation decisions, choosing exit over reputational exposure.
The rapidly evolving nature of technology risk further complicates oversight. Cybersecurity breaches, data privacy violations, algorithmic bias, and AI ethics present novel challenges for boards. Independent directors without deep digital expertise may feel inadequately equipped to discharge oversight responsibilities, increasing perceived liability and accelerating exits.
8.4 Family-Owned and Promoter-Led Enterprises
Family-controlled enterprises remain the dominant organizational form in India. While governance standards in this segment have improved significantly, informal power structures continue to influence board dynamics. Independent directors often operate within unspoken hierarchies where key decisions are shaped outside formal board processes.
Recurring governance friction points include related-party transactions, capital allocation toward family-controlled entities, executive compensation for family members, and succession planning. Independent directors who raise concerns may face subtle resistance, exclusion from informal discussions, or erosion of influence. Over time, repeated frustration leads to disengagement and eventual resignation.
However, it is important to note that governance outcomes in family businesses are not uniformly negative. Several large Indian conglomerates have empowered independent directors meaningfully, integrating them into strategy, risk oversight, and leadership development. These examples demonstrate that governance culture, rather than ownership structure alone, determines the effectiveness and retention of independent directors.
9. Legal, Reputational, and Personal Risk Landscape for Independent Directors
The legal and reputational risk environment for independent directors in India has changed fundamentally over the past decade. While governance reforms were intended to strengthen accountability, their practical implementation has created a climate where independent directors are exposed to disproportionate personal risk relative to their actual control over corporate outcomes.
9.1 Legal Exposure and Regulatory Actions
Independent directors today face exposure from multiple regulatory and enforcement bodies, including SEBI, the Serious Fraud Investigation Office (SFIO), the Enforcement Directorate (ED), state police authorities, and sectoral regulators such as the Reserve Bank of India. In many investigations, independent directors are named by default as part of the board, even when allegations primarily concern executive actions or promoter misconduct.
A key concern is the absence of clear statutory safe harbors. Although the Companies Act recognizes that independent directors are not involved in day-to-day management, enforcement practice often blurs this distinction. Directors are questioned on why risks were not foreseen, controls not strengthened, or management not restrained—despite limited access to granular operational data.
9.2 Retrospective Liability and Hindsight Bias
One of the most destabilizing elements of the current environment is retrospective enforcement. Decisions taken under uncertainty are later judged with full knowledge of outcomes. This undermines the business judgment principle and creates fear that any adverse event—financial distress, regulatory breach, or fraud—can trigger personal scrutiny years after the fact.
This hindsight bias has had a chilling effect on board participation. Independent directors increasingly perceive that good faith is not an adequate defense in practice, even if it is recognized in theory.
9.3 Reputational Damage and Media Trial
Beyond legal consequences, reputational risk has become a decisive factor in board exits. Media reporting on corporate failures often names independent directors alongside promoters and executives, without contextualizing their actual role or authority. For senior professionals, academics, or retired civil servants serving as independent directors, such public association with controversy can permanently damage professional standing.
Even when allegations are eventually dismissed, reputational harm is rarely reversible. This asymmetry between accusation and exoneration has significantly altered the risk calculus of board service.
9.4 Psychological and Personal Costs
The cumulative impact of legal uncertainty, reputational anxiety, and prolonged investigations imposes significant psychological stress. Independent directors report anxiety, distraction from primary professional pursuits, and strain on personal life. These intangible costs, while not visible in governance statistics, play a central role in decisions to resign.
10. Impact on Corporate Governance, Capital Markets, and Investor Confidence
The exodus of independent directors has consequences that extend far beyond individual boards. It has systemic implications for corporate governance quality, market confidence, and capital allocation across the Indian economy.
10.1 Erosion of Board Effectiveness
Frequent exits disrupt board continuity, institutional memory, and committee functioning. New appointees require time to understand the business, reducing the board’s ability to provide consistent oversight. In some cases, vacancies remain unfilled for extended periods, weakening governance precisely when stability is most needed.
10.2 Investor Perception and Market Signaling
Institutional investors increasingly view independent director churn as a red flag. Proxy advisory firms flag mid-term resignations as indicators of governance stress, often prompting voting opposition to management resolutions. For foreign institutional investors, who rely heavily on board quality as a proxy for governance, such churn raises concerns about transparency and risk management.
10.3 Cost of Capital and Valuation Impact
Governance instability can translate into tangible financial consequences. Companies with frequent board exits may face higher risk premiums, reduced valuation multiples, and increased scrutiny from lenders and rating agencies. Over time, this raises the cost of capital and undermines competitiveness.
10.4 Broader Systemic Implications
At a macro level, weakening board oversight undermines trust in Indian capital markets. As India seeks to attract long-term global capital, governance credibility becomes a strategic asset. Persistent independent director exits threaten this credibility.
11. In-Depth Solutions and Systemic Reforms
Addressing the independent director crisis requires systemic reform, not cosmetic adjustments. Solutions must rebalance accountability with authority, strengthen board capability, and restore trust in the role.
11.1 Legal Safe Harbors and Proportional Liability
India needs explicit statutory safe-harbor provisions for independent directors acting in good faith. Liability should be proportionate and linked to demonstrable negligence, willful misconduct, or collusion—not mere board membership. Clear thresholds for responsibility would significantly reduce risk aversion.
11.2 Strengthening Information Rights
Independent directors must have direct, unfiltered access to key assurance functions such as internal audit, compliance, risk management, and external auditors. Reliance solely on management-prepared presentations must be replaced by evidence-based information systems.
11.3 Board Information Architecture
Boards should adopt structured information architectures that include early-warning dashboards, risk heat maps, subsidiary-level reporting, and independent assurance reviews. This would reduce blind spots and improve decision quality.
11.4 Professionalization of Independent Directorship
Independent directorship should be treated as a professional discipline. Mandatory training, continuous education, certification, and peer learning must become standard. Appointments should be competency-based rather than relationship-driven.
11.5 Cultural Transformation in Boardrooms
Ultimately, governance effectiveness depends on culture. Boards must evolve from promoter-centric forums to deliberative institutions that welcome challenge. Promoters and CEOs must internalize the value of dissent as a strategic asset, not a threat.
12. Emerging and Future-Ready Avenues for Independent Directors
Despite current challenges, the role of independent directors is poised for strategic reinvention. As business risks evolve, independent directors can become central to long-term value creation.
12.1 ESG and Sustainability Oversight
Environmental, social, and governance (ESG) considerations are becoming core to investor decision-making. Independent directors are uniquely positioned to oversee sustainability strategy, climate risk, and social impact with objectivity.
12.2 Cybersecurity and Data Governance
Cyber risk, data breaches, and digital resilience are now board-level issues. Independent directors with technology or risk expertise can provide critical oversight in an area where management incentives may be misaligned.
12.3 AI Ethics and Emerging Technology Risk
As artificial intelligence and automation reshape business models, boards must oversee ethical use, algorithmic bias, and regulatory compliance. Independent directors can act as custodians of responsible innovation.
12.4 Stakeholder Capitalism and Long-Term Value
Independent directors can help shift corporate focus from short-term financial metrics to long-term stakeholder value, aligning Indian companies with global governance expectations.
13. Recognition, Incentives, and the Evolving Social Contract
For independent directorship to remain viable, the social contract underlying the role must evolve.
13.1 Compensation Aligned with Risk
Remuneration must reflect the scale of responsibility, time commitment, and personal risk involved. This includes higher base compensation, committee premiums, and crisis-related fees.
13.2 Performance-Linked Governance Incentives
Boards should explore linking part of independent director compensation to governance outcomes such as audit quality, risk management effectiveness, and ESG performance.
13.3 Public Recognition and Institutional Prestige
Formal recognition through governance awards, investor communications, and public disclosures can restore the prestige of independent directorship. Recognition signals value and legitimacy.
14. Recommendations
A coordinated, multi-stakeholder response is required.
Regulators should introduce legal safe harbors, clarify liability standards, and align enforcement practices with governance realities.
Companies must empower boards through information, culture, and fair compensation.
Investors should actively reward governance stability and board effectiveness.
Independent directors must assert professional standards, demand information, and resist tokenism.
15. Conclusion
The mass exit of independent directors is not a failure of individuals; it is a failure of governance design. It reflects a system that demands accountability without granting authority, expects foresight without access, and assigns liability without protection.
India stands at a crossroads. Without urgent reform, the independent director role risks becoming symbolic and hollow. With thoughtful recalibration, however, independent directors can be restored as central pillars of ethical capitalism, institutional trust, and sustainable growth.
16. References
- Securities and Exchange Board of India. (2015). SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. SEBI.
- Securities and Exchange Board of India. (2018). Report of the Committee on Corporate Governance chaired by Shri Uday Kotak. SEBI.
- Government of India, Ministry of Corporate Affairs. (2013). The Companies Act, 2013. Government of India.
- Government of India, Ministry of Corporate Affairs. (2014). Companies (Appointment and Qualification of Directors) Rules, 2014. MCA.
- Reserve Bank of India. (2021). Corporate Governance in Banks – Directions. RBI.
- Reserve Bank of India. (2023). Guidelines on governance and risk management for NBFCs. RBI.
- Serious Fraud Investigation Office. (2019). Investigation report on Infrastructure Leasing & Financial Services Limited (IL&FS). Government of India.
- Securities and Exchange Board of India. (2020). Enforcement policy and adjudication framework. SEBI.
- Moneycontrol. (2025). Post-pandemic churn drives 30% jump in independent director exits to 510: Report. Network18 Media & Investments Ltd.
- Business Standard. (2025). Mid-term exits by independent directors at highest level since 2017. Business Standard Pvt. Ltd.
- Economic Times. (2024). Independent directors step down as regulatory scrutiny rises. Bennett, Coleman & Co. Ltd.
- Institutional Investor Advisory Services India Limited (IiAS). (2024). Board governance and independent director effectiveness in India. IiAS Research.
- Stakeholders Empowerment Services (SES). (2023). Corporate governance trends and board accountability in India. SES Governance Series.
- InGovern Research Services. (2024). Board dynamics, independence, and promoter influence in Indian companies. InGovern Publications.
- Narayana Murthy Committee. (2003). Report of the SEBI Committee on Corporate Governance. SEBI.
- Kumar Mangalam Birla Committee. (1999). Report on corporate governance. SEBI.
- Organisation for Economic Co-operation and Development. (2015). G20/OECD principles of corporate governance. OECD Publishing.
- Tricker, B. (2019). Corporate governance: Principles, policies, and practices (4th ed.). Oxford University Press.
- Solomon, J. (2020). Corporate governance and accountability (5th ed.). Wiley.
- Bebchuk, L. A., & Fried, J. M. (2004). Pay without performance: The unfulfilled promise of executive compensation. Harvard University Press.
- Khanna, T., & Palepu, K. (2010). Winning in emerging markets: A road map for strategy and execution. Harvard Business Press.
- Clarke, T. (2017). International corporate governance: A comparative approach. Routledge.
- OECD. (2020). Corporate governance responses to the COVID-19 pandemic. OECD Policy Responses.
- World Bank. (2019). Corporate governance in emerging markets: India country assessment. World Bank Group.
Supreme Court of India. (2021). Tata Consultancy Services Ltd. v. Cyrus Investments Pvt. Ltd. (Civil Appeal No. 2542 of 2020).
Disclaimer
This report has been prepared for informational, analytical, and thought-leadership purposes only. It reflects a synthesis of publicly available information, regulatory frameworks, academic literature, and professional judgment as of the date of preparation. The views and interpretations expressed herein are intended to contribute to informed discussion on corporate governance and do not constitute legal, regulatory, financial, or investment advice.
The report does not purport to represent the views of any regulator, government authority, corporation, board, or individual director. While reasonable care has been taken to ensure accuracy and relevance, the authors make no representation or warranty, express or implied, as to the completeness, accuracy, or timeliness of the information contained in this document. Readers are advised to seek independent professional advice before acting on any matters discussed herein.
Any references to specific companies, sectors, regulatory actions, or case examples are included solely for illustrative and educational purposes. Such references should not be construed as commentary on the governance quality, compliance status, or conduct of any individual organization or its directors. No inference should be drawn regarding ongoing investigations, legal proceedings, or regulatory outcomes.
The authors disclaim any liability for direct or indirect loss, damage, or consequences arising from reliance on this report. The use of this document is entirely at the reader’s discretion, and by accessing or using this report, the reader acknowledges and agrees to these limitations.