Corporate Boards: Human or Bot?

Abstract

With the dawn of artificial intelligence (AI), it is only a matter of time before it amplifies or even replaces human decision-making in corporate governance. This threatens to subvert the core concepts of a director as laid down in the Companies Act, 2013, like director duties, accountability, and the nature of corporate leadership. This article delves into the legal ramifications of integrating AI inside the corporate boardrooms, specifically from the statutory lens of Indian corporate laws. This paper focuses on Chapter XI, where it explores the applicability–or the lack thereof, of these provisions when AI systems are engaged in board decisions. The issues revolve around AI’s decision making–the legal status and the allocation of liability for harmful decisions influenced by AI systems–in light of directors’ fiduciary duties. Additionally, it examines the challenges of ensuring transparency, particularly in relation to algorithmic biases and the Black Box Phenomenon. This article concludes by proposing recommendations for a comprehensive regulatory framework governing the ethical use of AI in corporate boards, including, but not limited to–guidelines for algorithmic accountability, regular AI system audits, and enhanced disclosure requirements for companies employing AI in governance. Through this research, the author seeks to advance the emerging field of AI governance and provide insights for policymakers, corporate directors, and AI developers working at the intersection of technology and corporate law.