Independent director

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Querist : Anonymous

Querist : Anonymous (Querist)

14 September 2012 My query is if a person intends to be appointed as an independent director,how should he pursue this.

Ajay Mishra

Ajay Mishra (Expert)
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15 September 2012 Hi

The Companies Act, 1956 not define the term "Independent Director". It is defined in Clause 49 of the Equity Listing Agreement, which is as follow:

the expression ‘independent director’ shall mean a non-executive director of the company who:
a. apart from receiving director’s remuneration, does not have any material pecuniary relationships or transactions with the company, its promoters, its directors, its senior management or its holding company, its subsidiaries and associates which may affect independence of the director;
b. is not related to promoters or persons occupying management positions at the board level or at one level below the board;
c. has not been an executive of the company in the immediately preceding three financial years;
d. is not a partner or an executive or was not partner or an executive during the preceding three years, of any of the following:
i. the statutory audit firm or the internal audit firm that is associated with the company, and
ii. the legal firm(s) and consulting firm(s) that have a material association with the company.
e. is not a material supplier, service provider or customer or a lessor or lessee of the company, which may affect independence of the director;
f. is not a substantial shareholder of the company i.e. owning two percent or more of the block of voting shares.
g. is not less than 21 years of age

Before going to appoint, above point should be kept in mind.

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