Transaction not exceeding 10% of the total income) with company or any of its subsidiary, holding or associate companies or their directors or promoters, during the current financial year or the last two immediately preceding financial years. The person should not have any financial relationship (other than remuneration as a director or having.Related to the directors or promoters in the company, or any of its subsidiary, holding or associate companies.A promoter of the company or its subsidiary, holding or associate companies.have given a guarantee or security in connection with the indebtedness of a third person to the company, its subsidiary, holding or associate company or their directors or promoters of such holding company, for an amount of Rs.50 lakhs, at any time during the two immediately preceding financial years or during the current financial year.be indebted to the company, its subsidiary, holding or associate company or their director or promoters.The relatives of an independent director should not.The person should possess appropriate experience, skills and knowledge in one or more fields of law, finance, management, marketing, sales, research, administration, technical operations, corporate governance, or other disciplines related to the company’s business.Qualifications of an Independent Director The terms and conditions of appointment of independent directors should also be posted on the company’s website. These unlisted public companies - joint venture, wholly owned subsidiary and dormat company are not required to appoint an independent director even if they meet the criteria.Įvery independent director should give a declaration that he/she meets the criteria of independence at the 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 arises which affects his status of independence. The company must appoint a higher number of directors if a higher number of independent directors ir required to compose audit committee.ģ. The amount existing on the last date of latest audited financial statements shall be taken into account for calculating the paid-up share capital or turnover or outstanding loans, debentures and deposits.Ģ. Public companies with aggregate outstanding loans, debentures, and deposits, exceeding Rs.50 crore.ġ.Public companies with a turnover of Rs.100 crore or more.Public companies with paid-up share capital of Rs.10 crore or more.Unlisted Public CompanyĪs per Rule 4 of the Companies (Appointment and Qualification of Directors) Rules, 2014, the following classes of companies must have at least 2 directors as independent directors: Any fraction contained in that one-third shall be rounded off as one. The provisions relating to the 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 Applicability On Appointing An Independent Director Listed Public CompanyĮvery listed public company must have at least one-third of a total number of directors as independent directors. He or she does not have any kind of relationship with the company that may affect the independence of his/her judgment. The independent director should not be a managing director, a whole-time director or a nominee director. Independent DirectorĪn independent director is a non-executive director of a company who helps the company in improving corporate credibility and governance standards. The term “Independent Director” has been defined in the Act, along with several new requirements relating to their appointment, duties, role, and responsibilities. But Independent Directors are in the limelight as per the Companies Act, 2013. The Companies Act, 1956 did not provide a specific definition of an Independent Director. As per the Companies Act, 2013 ('Act'), certain companies must have independent directors on their Board of Directors. The Board of Directors consists of individual directors of a company. The Board of Directors manage the operations of a company.
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