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‘The Independent Director’
‘The Independent Director’

‘The Independent Director’ - Description


By CS Makarand Joshi makarandjoshimmjcin Coverage of this PPT Eligibility Who is eligible to be Independent Director Non executive director not being a nominee director A director who is not a promoter or related to promoters or directors of the Company or its holding subsidiary asso ID: 536273 Download Presentation

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Slide1

‘The Independent Director’

By CS Makarand Joshi

makarandjoshi@mmjc.inSlide2

Coverage of this PPTSlide3

EligibilitySlide4

Who is eligible to be Independent Director?

Non executive director, not being a nominee director

A director who is not a promoter or related to promoters or directors of the Company or its holding / subsidiary / associate company

A person who by himself or through his relatives is not having or had any material pecuniary relationship with Company / its holding / subsidiary / associate company / their promoters / directors during the 2 immediately preceding financial years or current yearSlide5

Who is eligible to be Independent Director?

A person who, in any of the 3 years immediately preceding the financial year in which he is proposed to be appointed, has not, directly or through his relatives, had the following relationship with Company/holding / subsidiary / associate company:-

KMP or employee

Employee / proprietor / partner of a firm of auditors / company secretaries in practice or cost auditors

Any legal or consulting firm that has / had transaction with the above amounting to 10% or more of gross turnover of such firmSlide6

Who is eligible to be Independent Director?

A person who does not hold together with his relatives 2% or more of the total voting power of the Company

A person who is not a Chief Executive or director, by whatever name called, of any non profit organization that receives 25% or more of its receipts from the Company, promoters, directors or its holding, subsidiary or associate company or that holds 2% of the total voting power in that company

A person who is not a material supplier, service provider, or customer or a lessor or lessee of the Company

A person who is not less than 21 years of ageSlide7

Code of ConductSlide8

Code of Conduct

The duties of Independent Directors should be mentioned in the Code of Conduct of the Company

All Directors and senior management personnel should affirm compliance with Code of Conduct on annual basis

Code of Conduct to be posted on Company’s websiteSlide9

Maximum DirectorshipsSlide10

Maximum Limit

He can be an Independent Director in max 7 listed companies

If he is a Whole Time Director in any listed company, then he can be an Independent director in max 3 listed companiesSlide11

Maximum TenureSlide12

Maximum Tenure

Max term of 5 consecutive years

Eligible for reappointment on passing of a special resolution by the company and disclosure of such appointment in the Directors Report.Slide13

Powers of Independent DirectorSlide14

Powers of Independent Director...

To hold separate meetings without attendance of non independent directors to review performance of non independent Directors and Board as a whole, Chairman, quality, quantity and timelines of flow of information, etc

Board meeting can be held at shorter notice only with the presence of at least 1 independent director

In case no independent director attends such Board meetings, decisions taken thereat must be ratified by at least 1 independent directorSlide15

Powers of Independent Director...

To report concerns about any unethical

behaviour

, actual or suspected fraud or violation of Company’s code of conduct under the Whistle blower policy of the Company

To report any such concerns to the Chairman of the Audit Committee – who shall be an Independent Director, for further investigationSlide16

Duties of Independent DirectorSlide17

Duties as per Companies Act

To act in accordance with Articles of Association

To ensure Company is operating to promote objects of the Company for the benefit of shareholders, employees and in best interest of Company

To exercise independent

judgement

while approving decisions on behalf of Company

Not to involve in a situation in which he may have direct or indirect conflict with the interest of CompanySlide18

Duties towards decision making

To attend Board / Committee Meeting

To discharge duties with diligence

To discharge duties with care

To discharge due skills

To ensure agenda is sufficient and proper

To ensure decisions are taken … and executedSlide19

Duty towards stakeholdersSlide20

Duty .. Not to have conflict

To give disclosure of interest in first BM of FY

To give disclosure about change in interest (either as Director or Shareholder)

Not to involve in situation of conflict of interest

Not to deal in forward dealing in securities

No to deal in insider trading of shares of the CompanySlide21

What is disclosure of interest?

To disclose list of relatives

To disclose list of companies / firms / Trust in which Director is owner / director / shareholder

To disclose list of firms in which his relatives has interest

Disclosure to be given every year and whenever there is change

Format is MBP 1Slide22

What is conflict?

Not to involve ‘self’ or ‘self benefited entity’ as supplier or customer or in other nature

Not to have competing business with that of companySlide23

Duty towards laws ….

To ensure compliance with all applicable laws

To ensure proper system to ensure compliance with all laws

To ensure that compliance system is adequate

To ensure that compliance system efficiently functioningSlide24

Stake holders protection visa a vis compliance of laws

Ensure compliance of all applicable laws

SHs

(Companies Act, SEBI)

Customers Contracts and

warrantee

Environment (Environmental Laws)

Employees

(

Labour

Laws)

Company

(Corporate Laws)

Government (Revenue Laws)

Economy [

Fema

& Customs laws] Slide25

LiabilitiesSlide26

Liabilities

Independent Directors are liable for acts / omissions occurred with his knowledge attributable through broad process

Penalties = monetary or imprisonment

Insurance can be taken to cover liabilitiesSlide27

Whether Director is liable for liabilities of the ‘Company’?

Towards borrowed funds – yes, if personal guarantee is given

Towards commercial liabilities – No

Towards contingent liabilities – No

Towards legal / compliance liabilities – Yes

Towards criminal liabilities – Yes, if involved either Directly or IndirectlySlide28

How to avoid liabilities ?

Discharge all duties diligently

Ensure system is set to take care of financial controls

Ensure system is set to take care of compliance

Ensure that there is a system for preparation of meaningful agenda

Ensure that there is a system to identify related parties and avoid any contract without board approval

Ensure Introduce doer .. Checker systemSlide29

Thank you

We will be happy to help you become successful Independent Director

MMJC

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