On a brief go through with Section 149 & Schedule IV i.e. Code of Conduct for Independent Directors, it has been provided that the appointment of Independent Director is subject to the approval of members in the general meeting.
As per the Companies Act, 2013 a separate criterion has been established for the companies to have an Independent Director.
Basically, we can say that an independent director is a non-executive director of a company who helps the company in improving corporate credibility and governance standards. He/ She do not have any kind of relationship with the company that may affect the independence of his/ her judgment.
The term “Independent Director” has been defined in the Act, along with several new requirements relating to new requirements relating to their appointment, duties, role, and responsibilities. The provisions relating to appointment of Independent directors are contained in Section 149 of the Companies Act, 2013 should be read along with Rule 4 and Rule 5 of the Companies (Appointment and Qualification of Directors) Rules, 2014
Therefore, there are two ways for appointment of Independent Directors in a Company either in the Board meeting as Additional Director (Non-Executive & Independent) or either directly in the General meeting i.e. Annual General Meeting or Extra-Ordinary General Meeting.
Given below is the draft of Board Resolution for the appointment of Independent Director in Board Meeting who shall hold the office upto general meeting & afterwards, appointed as a Director in General meeting.
Listed Public Company
Every listed public company shall have at least one-third of a total number of directors as independent directors.
Any fraction contained in that one-third shall be rounded off as one.
Unlisted Public Company
The Central Government may prescribe the minimum number of independent directors in case of any class (es) of public companies.
As per Rule 4 of the Companies (Appointment and Qualification of Directors) Rules, 2014, the following classes of companies shall have at least 2 directors as independent directors.
Every independent director shall, at first meeting of the board in which he participates as a director and thereafter at the first meeting of the Board in every financial year or when a situation arise which effects his status of independence
The terms and conditions of appointment of independent directors shall also be posted on the company’s website.
Independent Director acts as a guide, coach, and mentor to the Company. The role includes improving corporate credibility and governance standards by working as a watchdog and help in managing risk. Independent directors are responsible for ensuring better governance by actively involving in various committees set up by company
The independent directors are required because they perform the following important role :
The Independent Directors shall:
CERTIFIED TRUE COPY OF THE RESOLUTION PASSED AT THE (NO.) MEETING OF THE F.Y. OF THE BOARD OF DIRECTORS OF (NAME OF COMPANY) HELD ON (DAY), (DATE) AT (TIME) AT THE (ADDRESS)
Appointment Of (Name Of Director) As An Additional Director (Non-Executive & Independent)
“RESOLVED THAT pursuant to the provisions of Section 149, 150, 152 read with schedule IV and Section 161(1) read with Companies (Appointment and Qualification of Directors) Rules, 2014, and other applicable provisions, sections, rules of the Companies Act, 2013 (including any statutory modifications or re-enactment thereof for the time being in force), Consent of the Board be and is hereby accorded, to appoint (Name of Director) as an Additional Director (Non-Executive & Independent) on the Board of the Company w.e.f. ______________ to hold office till the conclusion of the next Annual General Meeting and subject to the approval of the members in the ensuing General Meeting, for appointment as an Independent Director to hold office for a term upto ________ consecutive years from the date of ensuing general meeting.”
“RESOLVED FURTHER THAT any of the Directors for the time being be and are hereby severally authorized to sign and execute all such documents and papers (including appointment letter etc.) as may be required for the purpose and file necessary e-form with the Registrar of Companies and to do all such acts, deeds and things as may considered expedient and necessary in this regard.”
“RESOLVED FURTHER THAT any one of the Directors for the time being be and are hereby severally authorised to sign the certified true copy of the resolution of the resolution to be given as and when required.”
Certified true Copy
For (Name of the Company)
Name of Director
Disclaimer: The Author does not in any way take responsibility & guarantee towards the 100% accuracy of the information provided in this article. The Author has tried to prepare the article based on the relevant information available & is a mere opinion of author. Other views are most welcome for the suggestions or improvement in the article.