As per point no. VII. of Schedule IV of Companies Act, 2013
(1) The independent directors of the company shall hold at least one meeting in a year, without the attendance of non-independent directors and members of management;
(2) All the independent directors of the company shall strive to be present at such meeting;
(3) The meeting shall:
(a) review the performance of non-independent directors and the Board as a Whole
(b) review the performance of the Chairperson of the company, taking into account the views of executive directors and non-executive directors;
(c) assess the quality, quantity and timeliness of flow of information between the company management and the Board that is necessary for the Board to effectively and reasonably perform their duties.
Clause 49.II.B.6 of the listing agreement also contains the similar provisions for the separate Meeting of Independent Directors
Points of discussion:
|1||Presence only of Independent Directors. Whether CS also allowed?||The Company Secretary is either reporting to the Board directly or through an Executive Director or any Functional Head and hence covered under the ‘Senior Management’ (Reference explanation given under section 178) and hence CS can not be a part of this meeting.|
|2||If CS is not allowed to enter in the meeting, who will convene, issue notice and prepare minutes of the meeting.||Since law is silent on the issue, it is presumed that any Independent Director can do this activity based on the majority of Independent Directors’ decision.|
|3||Is it a Committee of Directors||The same is created by the Statute and hence not a Committee of Directors.|
|4||Whether Sitting fees be paid for attending the meeting||As per rule 4 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 a Company may pay sitting fee to a director for attending meetings of the Board or Committees thereof… |
However section 197(5) of the Companies Act, 2013 prescribes that a director may receive remuneration by way of fee for attending meetings of the Board or Committee thereof or for any other purpose whatsoever as may be decided by the Board.
Since the Act has provided wide powers to the Board for payment of Sitting fee for any other purpose as well, the fee can be paid. However, it is recommended that a separate one time resolution is passed in the Board meeting enabling such payment unless such decision is already covered by an earlier resolution enabling such payment.
|5||Whether Minutes of the Meeting be noted in the subsequent Board Meeting. |
|Since it is not a Committee of Directors, it seems that the Minutes of the Meeting need not be circulated for noting of the Board, unless the meeting itself decides otherwise. Such recommendation by the meeting is also recommendatory.|
|6||Who will preserve these Minutes and attendance records of the same||The law is silent on the same, however would be recommended that the same be preserved by the Company Secretary on the direction of the meeting of Independent Directors.|
|7||As per statutory requirements the meeting of Independent Directors shall review the performance of the Chairperson of the company, taking into account the views of executive directors and non-executive directors. How the views of the executive directors and non-executive non-Independent directors shall be taken into account.||No such methodology is provided in the law. However, it would be appropriate that the convener Independent Director of such meeting also writes to the Executive Directors as well as non-executive non-independent directors seeking their views on the performance of the Chairperson of the Company, and accumulate such views and discuss the same in their meeting. To reiterate Executive and Non-Executive Non-Independent Directors can not attend the meeting.|
|8||What is the Quorum of the meeting||Nothing is prescribed. However, the law says that all the independent directors of the company shall strive to be present at such meeting. In view of the same, we may conclude that the quorum shall be two persons Independent Directors personally present.|
|9||Frequency and gap between meetings||The act prescribes at least one in a year. Year not defined and hence presumed as Financial Year and frequency is minimum 1 and maximum not prescribed. Further, there is no restriction between time gap between two such meetings. Hence if one meeting is held on 1st April 2015 and second on 31st March 2017, it is a valid compliance.|
|10||Requirement of Notice Period||Section 173 of the Companies Act, 2013 prescribes that a meeting of the Board of Directors shall be called by giving not less than seven days’ notice. However the same is applicable only for the Board meeting and hence this meeting has no such restriction regarding requirement of notice period.|
|11||Can the same be conducted by way of Video Conferencing||There seems to be no restriction on the same, however keeping in view the sensitive nature of items proposed to be discussed through personal meeting.|