LIVE GST Certification Course by CA Arun Chhajer begins 21st April. Register Now!!

Independent director

Shilpa (Company Secretary) (234 Points)

08 September 2014

Dear Professionals,

I have a query that whether Independent Director can hold any shares in a Company...?

sec 149 (6)(e)(iii) says that an Independent Director can hold along with his relative not more than 2% of the total voting capital of the Comapny.

It means Independent can hold shares alongwith his relative only upto 2%.

But Sec 149(9) says that an independent Director cannot hold any stock option in the Company...then what is the significance of this section..?

Regards

Shilpa

Reply
Follow
Share

3 Replies

SUMIT KUMAR JANGID (CA FINAL STUDENT) (136 Points)
Replied 08 September 2014

Companies cannot allot stock options to independent directors, according to the Companies Act. They can be paid only sitting fees.
Industry feels this clause will crimp their ability to attract high calibre individuals. Incidentally, the listing agreement allows listed companies to allot stock options to independent directors, after obtaining shareholders consent.

1 Like

RoHaN k (CA & CS) (308 Points)
Replied 08 September 2014

CA 2013 ACT prevails over Listing agreement,

If it is specificaly denied in section 149 then company can not allot stock option to independent directors,

But , ID can buy shares from market and should disclose, company can not give any additional shares to ID.

1 Like

prakash (Company Secretary) (1352 Points)
Replied 12 September 2014

ID can hold shares along with his relative upto 2% of voting capital of the company, it will not affect his independence but employee stock option should be granted to ID. he can acquire that two per cent in normal method but not by stock option scheme.

1 Like