APPOINTMENT OF AN INDEPENDENT DIRECTOR
(1) Appointment process of independent directors shall be independent of the company management; while
selecting independent directors the Board shall ensure that there is appropriate balance of skills, experience and
knowledge in the Board so as to enable the Board to discharge its functions and duties effectively. Independent
director may be selected from Databank.
(2) The appointment of independent director(s) of the company shall be approved by the company at the meeting of the shareholders.
(3) The explanatory statement attached to the notice of the meeting for approving the appointment of independent
director shall include a statement that in the opinion of the Board, the independent director proposed to be
appointed fulfils the conditions specified in the Act and the rules made thereunder and that the proposed
director is independent of the management. It shall also indicate the justification for choosing the appointee for
appointment as Independent Director.
(4) The appointment of independent directors shall be formalized through a letter of appointment, which shall
(a) The term of appointment;
(b) The expectation of the Board from the appointed director; the Board-level committee(s) in which the
director is expected to serve and its tasks;
(c) The fiduciary duties that come with such an appointment along with accompanying liabilities;
(d) Provision for Directors and Officers (D and O) insurance, if any;
(e) The Code of Business Ethics that the company expects its directors and employees to follow;
(f) The list of actions that a director should not do while functioning as such in the company; and
(g) The remuneration, mentioning periodic fees, reimbursement of expenses for participation in the Boards
and other meetings and profit related commission, if any.
(5) The terms and conditions of appointment of independent directors shall be open for inspection at the
registered office of the company by any member during normal business hours.
(6) The terms and conditions of appointment of independent directors shall also be posted on the company’s website.
(7) He shall be hold office for a term of upto 5 consecutive years of a company. [Section 149(10)]
RE-APPOINTMENT OF AN INDEPENDENT DIRECTOR
The re-appointment of independent director shall be on the basis of report of performance evaluation. (
Schedule IV – Code for Independent Directors)
Section 149(11) provides that the Independent Director shall be eligible for re-appointment on passing of special
resolution. He shall not hold office for more than 2 consecutive terms, but such independent director shall be
eligible for appointment after the expiration of 3 years of ceasing to become an independent director.
However, he shall not, during the said period of 3 years, be appointed in or be associated with the company in
any other capacity, either directly or indirectly.