Section 149 of Companies Act 2013 deals with Appointment and Qualification of Directors. Same Section also contains Provisions related to Appointment of Independent Directors.

1. Applicability of Independent Directors (“IDs”):

  • All Listed Companies
  • All Public Companies having

a. Turnover is Rs. 100 cr or more

b. Aggregate Outstanding loans, debentures and deposits exceeds Rs. 50 cr

Applicability

2. Number of Independent Directors required in a Company:

  • Listed Companies : Atleast 1/3rd of total Directors
  • Unlisted Public Companies : Atleast 2 Directors as IDs

Unlisted company

3. Separate Meetings of IDs:

  • Hold atleast one meeting in a financial year with no any other Directors being

seperate meeting

4. Disclosures to be made by Independent Directors (IDs):

  • At very first Board Meeting as an ID participant
  • At every first Board Meeting in every financial year
  • Or whenever there is any material change, which may affect his/her status as ID.

disclousre

5. Inclusions of IDs’Meeting’s Agenda:

  • Review of the performance of Non-Independent Directors
  • Review of the performance of the Chairperson of the company
  • Assess the quality, quantity and timeliness of flow of information b/w the Board and the Company Management

agenda

6. Remuneration:

  • IDs not entitled to any stock options
  • Receive the remuneration by way of sitting fees
  • Or by way of reimbursement of expenses for participation in the meeting(s)
  • Profit related commission as may be approved by the Members

remunaration

7. Provisions related to Appointment / Re-appointment of IDs:

  • Appointment for a term upto 5 consecutive years, however can be appointed for less than 5 years.
  • Eligible for re-appointment by way of passing Special Resolution and its disclosure to be made in the Board’s report
  • However, IDs cannot hold office for more than 2 consecutive terms.*

Board Report

*One term can be of less than 5 years but appointment cannot be of more than 2 consecutive terms.

8. Provisions related to Vacancy :

  • To be filled up by the Board at the earliest.

Board Report images 1

  • Not later than immediate next BM or three months from the date of Vacancy.

9. Where one can look for IDs?

  • May be selected from ID data bank having names, address and qualification of persons who are willing / eligible to act as ID
  • Data bank is maintained by the Indian Institute of Corporate Affairs at Manesar, Gurugram.
  • Data bank includes the names for a period of one / five years or for life time, it depends upon the payment done by such persons.
  • Any individual (having DIN or not) may voluntarily apply to the Institute for inclusion of his/her name in the data bank.

Board Report images 2

For any further queries related to this topic, please contact undersigned !!

Author – ACS Shampa Juneja
Proprietor, Shampa Juneja & Associates
Associate, HRP Accounting & Advisory Services Private Limited
Mail ID: cssjandassociates@gmail.com

Author Bio

Qualification: CS
Company: Shampa Juneja & Associates
Location: Delhi, New Delhi, IN
Member Since: 01 May 2020 | Total Posts: 2

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