Independent director 149(6) (e)

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This discussion clarifies the eligibility criteria for independent directors under Section 149(6)(e), specifically concerning relatives who are or have been employees of the company. The key point is that the restriction on relatives being employees applies to the financial year of appointment and the three preceding financial years. However, if a relative was an employee in the past but is not currently employed, the candidate may still be eligible. A common point of confusion was misreading 'is' or 'has' as 'had', which impacts the interpretation of the rules.

priyanka pandey

priyanka pandey (Querist)

11 June 2021 who neither himself nor any of his relatives- is or had been employee of the co . in any of 3 fy immediately preeceding the fy in which i.d is proposed to be appointed.
provided in case of relative who is emplyee the restriction under this clase shall not apply during 3preecding 3 fy.

my dobut is... in first para it says for 3 fy relative shall not be associated as employee of co, and in 2nd para it allows those relatives who are associated as employee during 3 pfy.

dear members plz...help me with correct interpretation.

Deepa B

Deepa B (Expert)

08 July 2021 Please go through below explained scenarios to understand:
Case-1: The proposed candidate for independent director himself was an employee- Then the rule of preceding 3 financial year applies
Case-2: The proposed candidate is having a relative who is working as an employee as on date of appointment- Then he doesn't qualify to become an independent director because his relative is an employee as on that date
Case-3: Proposed candidate's relative was working as an employee assume in the previous year but currently not working there- Then in such case he is eligible to be appointed as an independent director. Because rule of 3 preceding financial year doesn't apply in case of relative, being an employee.
Also to clarify further in the section 149(e)(ii) the term used "is" or "has" but by mistake you have read it as "had" hence the confusion.
Hope it clarifies your doubt

priyanka pandey

priyanka pandey (Querist)

18 October 2021 yes you are right, i read it as " had" instead of "has"......Thanks for the help mam.

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