23 June 2012
Can a person who has been nominated as a director in a group company by one of its promoters be treated as an independant director.He has no personal interest in the new company in which he has been appointed as a director. However , he is already WTD in another company of the same group and both the companies may have certain inter-company transactions.
You have not mentioned the status of the Company in question i.e. whether it is a Listed or unlisted or private or public. I am answering your queries on the assumption that it is a listed company. Listing agreement clearly says that if a person has any material pecuniary relationships or transactions with the company, its promoters, its directors, its senior management or its holding company, its subsidiaries and associates should not be treated as independence director;
So as the person already holds the post of another group company as WTD, he should not be treated as independent director.
23 June 2012
Thanks. However,my query is relating to an Un-listed Pvt. Ltd. Company, which I have forgotten to mention.
The existing Companies Act has not mentioned an Independant Director.In the absence of such definition, it should mean a non-executive part time director, who does not receive any remuneration except sitting fee and participate only in Board or its Committeee Meeting.
In form 32 in the category of directors ,there are only 3 options viz. promoter director, professional director and independant director.
Now, if a part-time director is appointed by the Board ,as an additional director,and such director has neither been nominated by a promoter nor a member of any professional body, whether in the circumstances mentioned in my query, he can be treated as an independant director.If not, then in which category ,he will fall.
23 June 2012
Hi, your observation is an interesting one. The Companies act has not defined independent/professional director. However, presumption can be drawn that professional director means who has specialized knowledge/skill of any particular subject (need not be a member of a professional body). As far as independent director is concerned the Companies Act has not define the same. But, the listing agreement has given a clear definition of the same. Again it has no relevance to a pvt. Ltd. Company. Now if you are appointing a director in a pvt. Ltd. Company and if he is not a promoter, then you can treat him as a professional or independent which suite him most.
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