An Independent Director in relation to a Company, means a director other than a Managing Director or a Whole-time Director or a Nominee Director who fulfils the qualification/criteria in the opinion of the Board possesses relevant experience and expertise.
- A person shall not be eligible for appointment as an Independent Director of a Company, if he is disqualified from being appointed as a Director in the Company as per Section 164.
- The Company and Independent Directors shall abide by the provisions specified in Schedule IV.
- The total number of directorship of Independent Director shall not exceed the maximum limit as provided under section 165(1).
- An Independent Director shall hold office for a term up to five consecutive years on the Board of a Company, but shall be eligible for reappointment on passing of a Special Resolution by the Company and disclosure of such appointment in the Board’s report.
- No Independent Director shall hold office for more than two consecutive terms, but such Independent Director shall be eligible for appointment after the expiration of three years of ceasing to become an Independent Director.
- An Independent Director shall not, during the said period of three years, be appointed in or be associated with the Company in any other capacity, either directly or indirectly.
- Any vacancy in the office of the independent director resigning or is removed shall be filled by the listed entity at the earliest but maximum within 03 months from the date of such vacancy. However, in case the requirement of independent directors in the Board is fulfilled without filling the vacancy created by such resignation or removal, then appointment of a new independent director is not essential.
- Listed Entity shall abstain from appointing any independent director, who had previously resigned as an executive/whole time director on its board or on the Board of its holding, subsidiary or associate company or its promoter group, until the expiry of 01 year from the resignation date of such independent director.
Furnish the shareholders with the following information:
- Director’s brief resume along with the details on hs nature of expertise
- Relationships between directors inter-se
- Information on the listed entities where such person holds the directorship and the membership of Board Committees along with listed entities from where he/she has resigned in the past 03 years
- Shareholding of non-executive directors including the one as benefical owner in the listed entity
- In case of independent directors, the skills and capabilities required for the role and the manner in which the proposed person meets such requirements
Following Procedure is to be followed
- Obtain Written Consent and Declaration from the Independent Director
The Independent Director has to submit Form DIR-2 (Consent to act as a Director) and Form DIR-8 (Intimation by Director about his disqualification) to the Company. Such person shall also give a declaration that he fulfils the conditions for re-appointment as an Independent Director.
- Obtain Form MBP-1 from the Proposed Independent Director
Company shall obtain a disclosure of interest in Form MBP-1 from the person who is proposed to be appointed as an Independent Director.
- Meeting of Nomination and Remuneration Committee
Where a Company is required to constitute a Nomination and Remuneration Committee under section 178, shall receive a recommendation from the committee for the re-appointment of Independent Director by the Board of Directors of the Company. [For convening meeting of Nomination and Remuneration Committee, Refer the Procedure for Conducting Nomination and Remuneration Committee Meeting].
- Convene a Meeting of Board of Directors [As per section 173 & SS-1]
- Issue Notice of Board Meeting to all the Directors of Company at their addresses registered with the Company, at least 7 days before the date of Board Meeting. A shorter notice can be issued in case of urgent business.
- Attach Agenda, Notes to Agenda and Draft Resolution with the Notice. \
- Hold a meeting of Board of Directors of the Company and pass the necessary Board Resolution
- To evaluate the performance and consider the re-appointment of Independent Director, subject to the approval of shareholders in the General Meeting.
- To fix day, date, time and venue for holding General Meeting of the Company.
- To approve the draft notice of General Meeting along with explanatory statement annexed to the notice as per requirement of the Section 102 of the Companies Act, 2013.
- To authorize the Director or Company Secretary to sign and issue notice of the General Meeting and to do such acts, deeds and things as may be necessary to give effect to the Board’s decision.
- To authorize the Director or Company Secretary to sign and file requisite form and return with ROC.
- Listed Company shall submit the disclosure of such re-appointment within 24 hours from the conclusion of the Board Meeting and post the same on the website of the Company within 2 working days. [Regulation 30 & 46(3) of the SEBI (LODR) Regulations, 2015]
- Prepare and Circulate Draft Minutes within 15 days from the conclusion of the Board Meeting, by Hand/Speed Post/Registered Post/Courier/E-mail to all the Directors for their comments. [Refer the Procedure for Preparation and Signing of Minutes of Board Meeting]
- Convene General Meeting [Section 96, 100 and Secretarial Standard-2 (SS-2)]
- Notice of General Meeting shall be given at least clear 21 days before the actual date of a General Meeting in writing, by hand or by ordinary post or by speed post or by registered post or by courier or by facsimile or by e-mail or by any other electronic means or a Shorter Notice can be issued with the consent of at least majority in number and ninety five percent of such part of the paid up share capital of the company giving a right to vote at such a meeting in accordance with Section 101.
- Notice will be sent to all the Directors, Members, Auditors of Company, Secretarial Auditor, Debenture Trustees and to others who are entitled to receive the notice of the General Meeting.
- Notice shall specify the day, date, time and full address of the venue of the Meeting and contain a statement on the business to be transacted at the Meeting.
- Hold the General Meeting on fixed day and pass Special resolution for re- appointment of Independent Director. Also check the Quorum and check whether auditor is present, if not. Then Leave of absence is Granted or Not.
- To issue Letter of Appointment to the person appointed as an Independent Director.
- Listed Companies shall disclose the proceedings of General Meeting to the Stock Exchange within 24 hours from the conclusion of General Meeting and same shall be posted on the website of the company within 2 working days. [Regulation 30 and 46(3) of the SEBI (LODR) Regulations, 2015]
- Listed Companies shall submit to the stock exchange the details of the voting results within two working days from the conclusion of the meeting and post the same on the website of the Company. [Regulation 44 of the SEBI (LODR) Regulations, 2015]
- Prepare the minutes of General Meeting, get them signed and compile accordingly. [Refer the procedure for preparation, signing and compilation of minutes of General Meeting].
- Filing of Form DIR-12 with the ROC
After the Board Meeting, a Return of Appointment of Directorship (Form DIR-12) is required to be filed with Registrar within 30 days of appointment with copy of Special Resolution along with Consent to Act as Director and Declaration about his disqualifications. In case of Companies other than OPC and Small Company, the return is also to be certified by a Company Secretary/Chartered Accountant/Cost Accountant. Following documents will be required as an attachment with Form DIR-12
- Certified True Copy of the Special Resolution
- DIR-2 Consent to Act as Director
- DIR-8 Declaration by Director
- Declaration of Independence under section 149(7)
- Details of interest in other entities in form MBP-1
- Letter of Appointment.
- File Form MGT-14 with ROC
File Form MGT-14 with the ROC within 30 days of passing Special Resolution in General Meeting along with fee as specified in the Companies (Registration offices and fees) Rules, 2014 and with the following attachments
- Certified True Copies of the Special Resolution passed along with Explanatory Statement.
- Copy of the Notice of meeting sent to members along with all the annexure
- Shorter Notice Consent Letters from the members in case the General Meeting was convened at shorter notice.
- Copy of Attendance Sheet of General Meeting
- Any other attachment as may be applicable.
- Making Necessary entries in Register of Directors
Company should make necessary entries in the Register of Director and Key Managerial Personals and registers of contract and arrangements in which Directors are interested in Form MBP-4.
- Undertake Directors and Officers insurance:
The top 1000 listed entities are obligated to undertake Directors and Officers insurance (D and O insurance) for all their independent directors of requisite quantum and covering risks as determined by its Board and computed on the basis of market capitalization as on March 31 of the preceding financial year.
- File Necessary Amendment Application under following Acts
- Goods and Services Act
- Shops & Establishment Act
- Factories Act
- Foreign Exchange Management Act
- Inter-State Migrant workmen Act
- Private Security Agency Act
- Other Labour Laws
- Industry Specific Laws