2. Explaining the regulatory provisions of the Companies Act, 2013 and the rules thereof regarding the appointment of independent directors on a company's Board, state whether BCD company Ltd. is required to appoint Independent directors in the following situations:
(a)The company has a paid-up share capital of 10 crores.
(b) What shall be your answer in case the company's paid up share capital is only 2 crores.
(c) Whether a person who hold the position of a Key Managerial Personnel can be appointed as an Independent Director?
( Marks : 4 Marks )
( Time Allowed : 7 Mins)
Ans: Appointment of Independent Director:
As per sec. 149(4) of Companies Act, 2013, every listed public company shall have at least one- third of the total number of directors as independent directors, As per Rule 4 of the Companies (Appointment and Qualification of Directors) Rules, 2014, the following class or classes of companies shall have at least 2 directors as independent directors:
(1) the Public Companies having paid up share capital of 10 crore rupees or more; or
(2) the Public Companies having turnover of 100 crore rupees or more; or
(3) the Public Companies which have, in aggregate, outstanding loans, debentures and deposits, exceeding 50 crore rupees.
As per section 149(6) of Companies Act, 2013, a person is not eligible to be appointed as independent director if he holds or has held the position of a KMP or is or has been employee of the company or its holding, subsidiary or associate company in any of the 3 FYs immediately preceding the FY in which he is proposed to be appointed.
Conclusion: Applying the provisions of Sec. 149(4), Sec. 149(6) and Rule 4, following conclusions may be drawn:
(a) As the company has paid up share capital of Rs 10 Crores, 2 independent directors are mandatory as per requirement of Rule 4.
(b) In case paid up share capital of the company is Rs 2 Crores, independent directors are not mandatory.
(c) As provided by sec. 149(6), KMP cannot be appointed as Independent Director.
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