Various provisions regarding independent director, appointment, qualification, remuneration, duties and roles of Independent director as mentioned in Schedule IV. In case you need this power point presentation, you can comment your email id.

1. PROVISIONS REGARDING INDEPENDENT DIRECTOR
Prepared and Presented by:
Dipendra Prasad Poudel
Article trainee (Internal Audit)
mailfordipendra@gmail.com

2. APPOINTMENTOFINDEPENDENTDIRECTOR
For the purpose of this sub-section
any fraction contained in such one-third number shall
be rounded off as one
Every Listed Company;
At least one third of total number of directors shall be
independent Director .

3. ADHERENCE

4. TWOMINIMUMNUMBEROFIDS
Public companies having paid up share capital of Rs 10 crore or more; or
Public companies having turnover of one hundred crore rupees or more; or
Public companies which have, in aggregate, outstanding loans, debentures and
deposits, exceeding fifty crore rupees
If the company covered under this rule, is required to appoint higher number of
independent directors due to composition of its audit committee, such higher
number of independent directors shall be applicable to it

5. WHOISINDEPENDENTDIRECTOR?
Director other than managing director or a whole time
director or a nominee director
Who, in the opinion of board, is a person of integrity and
possess relevant expertise and experience

6. CANEVERYONEBEINDEPENDENTDIRECTOR????
 NO, person should have qualifications and should not have any
disqualification to be independent director.
 In the opinion of the board, he/she is a person of integrity and possess relevant
expertise and experience;
 Who is or was not a promoter of the company or its holding, subsidiary or
associate company;
 Who is not related to promoters or the directors of the company, its holding,
associate or subsidiary company
 Who has or had not pecuniary relationship with the company, its holding,
subsidiary or associate company , or the promoters, or directors, during the two
immediately financial year or during the current financial year.

7.  None of whose relative has or had no pecuniary relationship or
transaction with the company, its holding company, its
subsidiary or associate company, or their promoters , or
directors, amounting to
 Two percent or more of its gross turnover or total income
or fifty lakhs rupees or such higher amount as may be
prescribed, whichever is lower;
 During two immediately preceding financial year or
during the current financial year

8.  Who neither himself nor any of his relatives
 Hold or has held position of Key Managerial person in any of
three preceding financial year in which he is proposed to be
appointed.
 Is or has been employee or proprietor or a partner, in any of
the three financial year immediately preceding the financial
year in which he is proposed to be appointed of
 A firm of Auditors or company secretaries in practice
or cost auditors of the company.
 Any legal or consulting firm that has or had any
transaction with the company.
Note: For above mentioned provision company includes its
holding, subsidiary as well as associated company

9.  Holds together with his relatives two percent or more of the total voting
power of the company; or
 Is a chief executive or director, by whatever name called, of any
non-profit organization that receives twenty five percent or more
of its receipt from the company, any of its holding, subsidiary or
associate company or that holds two percent or more of the total
voting power of the company; or
 Who posses such other qualification as may be prescribed

10. REMUNERATIONTOINDEPENDENTDIRECTOR
 Re-imbursement of expenses for participation in the board and other meeting
 Profits related commission as may be approved by the member
 Maximum sitting fees shall not exceed one lakhs
 Sitting fees paid to Independent director shall not be less than fees paid to
other directors
Director shallnot be entitled to any option plan.

11. TENURE OF INDEPENDENT DIRECTOR
 For the period of five years
 Eligible for re-appointment on passing of special resolution
 No Independent director shall be eligible for appointment for more than
two consecutive period.
but shall be eligible for re-appointment after expiration of three
years of ceasing to become Independent director
Provided that, during the period of three year independent director shall
not be appointed or associated with the company in any other capacity
either directly or indirectly
Retirement of
Directors
By rotation
Shall not be
applicable

12. LIABILITYOFINDEPENDENTDIRECTOR
Shall be held Liable on acts of omission or commission of company,
1) Which had occurred with his knowledge, attributable through board
processes.
2) With his consent or connivance or where he had not acted diligently.

13. MANNEROFSELECTIONOF INDEPENDENTDIRECTOR
Selection of
Independent
Director
May be
Selected
From
Data
Bank
Data bank
consist
of Details
Details of
Name,
address,
qualificatio
n etc
Responsibility
of due
diligence is
of the
company

14. MANNEROFSELECTIONOF INDEPENDENTDIRECTOR
Data BankCan be
maintained
by
Body,
Institute or
Associatio
ns
Notified by
central
Governme
nt
Contains
the details
of
interested
candidate
Host the
eligible
persons detail
in their
website

15. MANNEROFAPPOINTMENTOFINDEPENDENTDIRECTOR
At GM
Explanatory
Statement shall
be annexed
along with
Notice
Indicate the
justification for
choosing the
appointee for
appointment

16. COMMITTEEINWHICHINDEPENDENTDIRECTORS
SHALLBEMEMBER
Independent Director
Audit Committee Nomination &
Remuneration
Committee
CSR Committee
The Institute of Chartered Accountants of India along with The Institute of
Companies Secretaries of India and The Institute of Cost Accountants of
India has maintained online repository. Please follow the link for details.
Click here to go to Independent Director Repository

17. CSRCOMMITTEE
Every company having net worth of Rs. 500 crore
or turnover of 1000 crore or net profit of 5 crore
shall form CSR committee
Board consisting of three or more directors out of
which one shall be independent director.
CSR committee shall formulate policy, recommend
the amount of expenditure, monitor the CSR policy
from time to time etc.

18. AUDITCOMMITTEE
Requirement
• Every listed company
shall have audit
committee; or
• Other public company
having paid up capital of
10 crore or more, or
turnover of 100 crore or
more, or loans or
borrowings exceeding 50
crore
Formation
• Consist of three minimum
directors with independent
directors forming majority
• Audit committee existing
before commencement of
this act shall within 1 year
re-constituted according
to 2013 Act
Duties of Audit Committee
• Recommend for
appointment ,
remuneration and terms
of appointment.
• Review and monitor the
auditors independence
and performance
• Examination of financial
statement and auditors
report thereon. etc

19. NOMINATIONANDREMUNERATIONCOMMITTEE
Requirement
• Every listed company shall
have audit committee; or
• Other public company
having paid up capital of 10
crore or more, or turnover of
100 crore or more, or loans
or borrowings exceeding 50
crore
Formation
• Consist of three or more
non-executive directors
out of which not less than
one half shall be
independent directors
• But, chairperson (either
executive or non-executive)
can be appointed as a
member But cannot chair
the committee
Duties of Nomination Committee
• Shall formulate the criteria
for determining qualification,
positive attributes and
independence of director.
• Shall identify the person
who are capable of being
directors and who may be
appointed in senior
management.

20. SCHEDULEIV:CODEFORINDEPENDENTDIRECTOR
Guidelines
for
professional
Conduct
Uphold ethical standards of integrity and probity
Act actively and constructively while exercising his duties
Exercise his responsibilities in bona fide manner in the interest of company.
Devote sufficient time and attention to his professional obligation for
informed and balanced decision making
Not abuse his position to detriment of the company or its shareholders or for
the purpose of gaining direct or indirect personal advantage.
Assist the company in implementing the best corporate governance
practices.

21. SCHEDULEIV:CODEFORINDEPENDENTDIRECTOR
Roles and
functions of
Independent
Director
Help in bringing the independent judgment on issues of strategy,
performance, risk management, resources, key appointments etc.
Bring an objective view in the evaluation of the performance of board
and management.
Scrutinize the performance of management in meeting agreed goals
and monitor the reporting performance.
Balance and safeguard the interest of all the stakeholders particularly
minority stakeholders.
moderate and arbitrate in the interest of the company as a whole, in
situations of conflict between management and shareholder’s interest.

22. SCHEDULEIV:CODEFORINDEPENDENTDIRECTOR
Duties of
Independent
Director
Strive to attend all the meetings of Board of directors and board committee
where he is a member and general meeting of the company.
Participate constructively and actively in the committees of the board in
which he is a chairperson or member
keep themselves well informed about the company and external
environment in which company operates.
Acting within his authority, assist in protecting the legitimate interest of the
company, shareholders and its employees
Not disclose confidential information, including commercial secrets,
technologies, advertising and sales promotional plans, unpublished price
sensitive information unless such disclosure is expressly approved by the
Board of Directors.

23. SCHEDULEIV:CODEFORINDEPENDENTDIRECTOR
Separate
meeting
The independent director shall hold at least one meeting in a year,
without the attendance of non-independent directors and member of
management.
All the independent director of the company shall strive to present at
such meeting.
The meeting shall :-
a) review the performance of non-independent directors and the
board as the whole.
b) review the performance of the chairperson of the company,
taking into account the views of executive director and non-executive
directors;
c) assess the quality, quantity and timeliness of flow of
information between the company management and the board that is
necessary for the board to effectively and reasonably perform their
duties.

24. N.Kochhar & Co.
304-306
DLF CENTER
Savitri Cinema Complex
Greater Kailash –II
New Delhi- 110048
www.nkandco.com