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Composition of board

Rema Kapoor (Assitant Secretarial Officer) (111 Points)

10 January 2012

Dear All,

I have a query regarding company's composition of Board. Right now we have total of 12 Directors in which 5 are whole time directors and 6 are independent directors.

Can our company consitute the Board as comprising 0f 6 whole time directors and 6 Independent Directors?

Please help me.

Thank You

Rema Kapoor

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7 Replies

AMIT MISHRA (Legal Professional) (393 Points)
Replied 10 January 2012

Hi Reema,

Yes absolutely you can have such a composition.

regards

Amit Mishra

Rema Kapoor (Assitant Secretarial Officer) (111 Points)
Replied 10 January 2012

Dear Amit,

Can you provide me with relevant provisions for supporting your reply

Parashar (Company Secretary 2004) (1013 Points)
Replied 10 January 2012

You says you have totoal 12 directors, whereby you mentioned (5+6=11) that means the remaining one is normal director and youwish to appoint him as a wholetime director is it so? First Check your Articles of Association, what do they say. If yours is a public company then check section 267, 268, 269 alongwith schedule XIII to the companies act, 1956. If your is a private company there is no such problem in any combination and incase of Listed company check your listing agreement alongwith the above said sections.

(Guest)

Dear Reema,

LISTING AGREEMENT SAYS:

(A) Composition of Board

(i) The Board of directors of the company shall have an optimum combination of executive and non-executive directors with not less than fifty percent of the board of directors comprising of non-executive directors.

(ii) Where the Chairman of the Board is a non-executive director, at least one-third of theBoard should comprise of independent directors and in case he is an executive director, at least half of the Board should comprise of independent directors.

Provided that where the non-executive Chairman is a promoter of the company or is related to any promoter or person occupying management positions at the Board level or at one level below the Board, at least one-half of the Board of the company shall consist of independent directors.

Your company can therefore consitute the Board as comprising 0f 6 whole time directors and 6 Independent Directors.

With Regards,

Neha

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Charu Srivastava (Company Secretary) (4210 Points)
Replied 10 January 2012

If the Chairman is Executive then 50% of the Board shall consist of Independent Dircetor.

If the Chairman is Independent Director, then atleast one -third of the Board Composition shall be independent.

Therefore your composition is in accordance with law.

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CS Ankur Srivastava (Company Secretary & Compliance Officer) (17848 Points)
Replied 10 January 2012

Nicely explained by Neha Jain and Charu....

Secondly, in case it is a non listed company then there is no problem the board can have any combination of executive and non executive directors subject to the limits as prescribed under section 259.

However, in case of unlisted public company having paidup capital of Rs. 5 Crore or more it is mandatory to appoint MD or WTD and to form an Audit Committee and therefore, it need to have atleast one MD / WTD and atleast 2 directors who are other thatn MD or WTD.

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