Clause 49 of Listing Agreement

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Anil Kale (Querist)
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09 June 2008 The Cl. 49 requires a listed company to have at least 50% of its directors as "independent" directors, if the chairman of the company is an Executive Chairman or he is related to Promoters family.

My query is - what if a company does not have a Chairman.

A company has option (but no compulsion) to appoint a Chairman of the Board. If a co. appoints such a Chairman, then at each meeting of the Board, he takes the Chair without any need for electing a chairman for every meeting. But if there is no such appointed chairman, then at each Board meeting the directors present will have to elect a chairman for that respective meeting.

Thus, the query is - if there is no such appointed Chairman, then can the company be exempt from the restrictive requirement of 50% "independent" directors? (In which case, it would be sufficient for the company if it has just 1/3rd of the directors as "independent"

Anil Kale

CS Jignesh Mistry

CS Jignesh Mistry (Expert)
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10 June 2008 since, Cl. 49,restricts company to have 1/2 of independent directors = if chairman is executive or 1/3rd of such directors = if chairman is non-executive, 2ndly, in every board meeting other directors to have chairman who will initiate the proceeding of the meetings & subsequently sign the minutes.
so, i think compliance to have chairman is mandatory either pre-decided or elected.

Anil Kale

Anil Kale (Querist)
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10 June 2008 assming that the co. does not have an appointed chairman of the Board, but chooses to elect one at each meeting separately .. in such a case, theoritically, in some of the meetings there could be an Executive Chairman, and in the others a Non-Executive Chairman ...... in such a scenario, how does the compliance get affected?

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