Section 149 of the Companies Act, 2019 provides for the composition of Board of Directors. For a public company, it is minimum 3 directors. It also provides for one woman director in case of some companies. Apart from that, every listed company must have at least one-third of directors as independent directors [Regulation 17]. In addition to this, for a listed company, the regulation of SEBI has to be complied with.
The specific regulation in this regard is SEBI (Listing Obligation and Disclosure Requirements) Regulation, 2015 (hereinafter ‘regulation’). Regulation 17 deals with the composition of Board of Directors. Some of the key elements of regulation are
1. Optimum combination of executive and non-executive director with at least one-woman director and minimum 50% of directors should be non-executive directors. [Regulation 17(1)(a)]
2. In case the chairperson of the board of director is a non-executive director, at least one-third of the board shall comprise of independent director.[Regulation 17(1)(b)]
3. In case a listed entity does not have regular non-executive director, at least half of the board shall comprise of independent director. [Regulation 17(1)(b)]
4. If a regular non-executive chairperson is the promoter or company or related to promoter or person occupying management position, half of the board shall comprise of independent directors. [Regulation 17(1)(b)]
5. In case a listed company has outstanding superior voting equity shares, half of the board shall comprise of independent directors.[Regulation 17(1)(d)]
6. No person who has attained age of 75 years shall be appointed non-executive director of a listed company unless a special resolution has been passed to that effect.
Apart from that, there are certain regulations applicable to top 500 or 1000 entities Some of them are:
1. Board of directors of top 500 entities shall have at least one-woman independent director by April 1, 2019. [Regulation 17(1)(a)]
2. Board of directors of top 1000 entities shall have at least one-woman independent director by April 1, 2020.[Regulation 17(1)(a)]
3. There shall be minimum 6 directors in case of top 1000 entities, with effect from April 1, 2019, and in case of top 2000 companies, with effect from April 1, 2020. [Regulation 17(1)(c)]
Top entities shall be determined on the basis of market capitalization as at the end of immediate previous financial year.
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