Provision related to appointment of Independent Director

By -
Provision related to appointment of Independent Director
*********************************************************
Section 149(4), chapter XI-Appointment and Qualification of Directors;

Every listed public company shall have at least 1/3rd of total number of directors as independent director and as per Rule 4 of Companies (Appointment and Qualification of Directors) Rules, 2014, class and classes of companies shall have at least two Director as Independent Director:-

1. The Public Companies having paid-up share capital of Rs. 10 crore or more; or
2. The Public Companies having turnover of Rs. 100 crore or more; or (now company covered under section 149 (4) as per last audited balance sheet, 2014-15)
3. The Public Companies which have, in aggregate outstanding loans, debenture and deposits, exceeding Rs. 50 crore or more:

Whereas company covered under this rule is required to appoint a higher number of independent directors due to composition of its audit committee.

Intermittent vacancy of an independent director shall be filled up by the Board at the earliest but not later than immediate next Board meeting or three months from the date of such vacancy, whichever is later:

Qualification of Independent Director, Rule 5 of chapter XI

He should also have appropriate skills, experience and knowledge in one or more fields of finance, law, management, sales, marketing, administration, research, corporate governance, technical operation or other discipline related to company’s business?

Procedure

Checklist related to appointment of Independent Director

Person cannot be appointed as an Independent Director If, the answer to any of the below given questions is Yes, Section 149(6) of Companies Act, 2013

1.         Is he a managing director or a whole-time director or a nominee director of the   company?
2.         Is he the promoter of the company or its holding, subsidiary or associate’s?
3.         Is he related with the promoters or directors of the company or its holding, subsidiary or associate?

4.       Does he have any pecuniary relationship with the company, its holding, subsidiary or associate, or their promoters or directors during the current financial year?

5.       Did he have any pecuniary relationship with the company, its holding, subsidiary or associate, or their promoters or directors during two immediately preceding financial year?

6.       Whether his relatives has or had any pecuniary relationship or transaction with the company, its holding, subsidiary or associate, or their promoters or directors, amounting to 2 percent or more of its gross turnover or total income or 50 lakhs or such higher amount as may be prescribed, whichever is lower, during two immediately preceding financial year or during current financial year?

7.    Whether he holds the position of key managerial person in the company, it’s holding, subsidiary or associate?

8.      Whether he has held the position of key managerial person in the company, its holding, subsidiary or associate in any of three financial years immediately preceding the financial year in which he is proposed to be appointed?

9.         Whether he is an employee of the company, it’s holding, subsidiary or associate?

10.    Whether he has ever been an employee of the company, its holding, subsidiary or associate in any of three financial years immediately preceding the financial year in which he is proposed to be appointed?

11.     Whether he is an employee or proprietor or partner of:

   ·      A firm of auditors or company secretaries in practice or cost auditors of the company or its holding, subsidiary or associate company?
  ·      Any legal or a consulting firm that has or had any transaction with the company, its holding, subsidiary or associate company amounting to ten per cent or more of the gross turnover of such firm?

12.    In point no. 8, 9, 10, 11, 12 instead of the person proposed to be appointed as an Independent Director, whether any of his relative satisfies those conditions?

13.   Whether such person together with his relatives holds two percent or more of the voting power of the company?

14.      Whether he or his relative is a Chief Executive or director, by whatever name called, of any nonprofit organization that receives 25 percent or more of its receipts from the company, any of its promoters, directors or its holding, subsidiary or associate company?

15.      Whether he or his relative is a Chief Executive or director, by whatever name called, of any nonprofit organization that holds 2 percent or more of the total voting power of the company?

  

Comments

Post a Comment

Popular posts from this blog

Foreign Trade Policy

By -
Image
Foreign Trade Policy (2015-20)  The new Foreign Trade Policy 2015-20 was unveiled by Commerce & Industry Minister, Mrs. Nirmala Sitharaman on 1st April 2015. It provides a framework for increasing exports of goods and services as well as generation of employment and increasing value addition in the country, in keeping with the “Make in India” vision of Prime Minister. The focus of the new policy is to support both the manufacturing and services sectors, with a special emphasis on improving the ‘ease of doing business’. The new foreign trade policy aims at increasing exports of goods and services to 900 billion by 2019-20, from $466 billion in 2013-14. It seeks to raise India’s share in world exports from existing 2% to 3.5% in near future . Highlights The foreign trade policy, 2015-20 may be categorized into following three parts for better understanding: A. Simplification and Merger of Reward Schemes The existing reward schemes have been merged into tw...
Read more

NCLT and NCLAT Provisions under Companies Act, 2013

By -
Sanoj Kumar (CS Management Trainee) ANALYSIS OF NOTIFICATION, 01 DAY OF JUNE 2016, REGARDING PROVISIONS OF ACT WHICH COME INTO FORCE. **************************************************************************************** Ministry of Corporate affairs wide Notification 01 June, 2016 constitutes National Company Law Tribunal and National Company Law Appellate Tribunal, and S.J Mukhopadhaya, retd. Judge of Supreme Court joins as the Chairperson of NCLAT while M.M Kumar, Judge (Retd.) joins as the President of NCLT. With the constitution of the NCLT, the Company Law Board constituted under the Companies Act, 1956 stands dissolved. Initially, NCLT will have eleven Benches, Two at New Delhi and one each at Ahmedabad, Allahabad, Bengluru, Chandigarh, Chennai, Guwahati, Hyderabad,Kolkata and Mumbai. With the constitution of NCLT & NCLAT, Central Government exercise the power conferred by section 1(3) of Companies Act, 2013 notify the following sections of Companies A...
Read more

Initial Public Offer meaning and Eligibility Norms

By -
Image
Sanoj Kumar (CS Management Trainee) E-mail: cssanoj.icsi@gmail.com Meaning An initial public offering, or IPO, is the first sale of stock by a company to the public. A company can raise money by issuing either debt or equity . (In simple word; when a company first time publicly sells their shares in the open market) Qualification for listing Eligibility Norms for making an IPO Eligibility Norm I (Profitability Route) A). Net Tangible assets of at least Rs. 3 Crores in each of the preceding three full years of which;                               Not more than 50% held are in monetary assets.       However, limit of 50% on monetary assets shall not be applicable in case the public offer is made entirely through offer for sale. B). Minimum of Rs. 15 Crores as average pre-tax operating pro...
Read more