Companies Act

Ans:  Steps to be followed for appointing an independent director are as follows:  Step 1: Identification based on independence criteria An independent director may be selected from a databank containing names, addresses and qualifications of persons who are eligible for this purpose. This databank is to be maintained by any entity authorized by the Central Government and will be uploaded on the Ministry of Corporate Affairs website. This is only for a facilitative purpose - a company is allowed to select any other person as independent director, provided the person meets. Step 2: Shareholder approval The appointment of independent Directors shall be approved at the meeting of the shareholders. The explanatory statement attached to the notice of the meeting shall include a statement that the independent Director proposed to be appointed fulfills the conditions mentioned in the Act. Step 3: Issue of appointment letter by board and obtaining declaration from director The appoint...

Ans:  Independent directors shall be held liable only for acts or omissions by a company which occurred with their knowledge, with their consent or connivance or where they did not act diligently. This will ensure that the independent directors can work honestly, and take decisions without the fear of being trapped in a false case.

Ans: Remuneration of independent directors It is essential that an independent director continues to remain 'independent', and hence remuneration is inconsistent with independence, barring certain conditions. An independent director shall not receive any stock option or remuneration except for attending meetings, reimbursement of expenses for participation in the meeting and may receive profits subject to the approval of shareholders. The sitting fee for independent directors shall not be less than the sitting fee payable to other directors. This was to ensure that there is no financial nexus between independent directors and the company. Equating the fee of independent directors and other directors will ensure that they do not feel they are at disadvantage. 

Ans:  Companies Act also mentions the Stakeholders Relationship Committee - this must be constituted by all companies which have more than 1000 holders of securities (shares, debentures or other securities). Stakeholder's Relationship Committee is one of the important committees within the organization responsible for looking after the interest of shareholders, debenture holders & other security holders; and. resolving the grievances of such security holders. The size of the committee can be determined by the board however, it is essential that the chairperson is a non-executive director (that is, someone who is not involved in day-to-day operations of the company and is not an employee of the company). An independent director must comply with other functions and duties mentioned under Code of Conduct provided under Schedule IV of the Companies Act, 2013.

Ans:  The composition of the board committee is given below : Name of the committee: 1. Corporate social responsibility committee: A company which meets the following conditions: Net worth of Rs 500 crores or more. Turnover of Rs 1000 crores or more. Net profit of Rs 5 crores or more. Size of the committee and number of independent directors required in corporate social responsibility: 3 or more directors and atleast one should be an independent director.  There is no restriction on the remaining directors being the full time directors.  2. Nomination and Remuneration Committee: Listed Companies and unlisted public companies which satisfy any of the following conditions: Paid up capital of Rs 10 crores or more. Turnover of Rs 100 crores or more. Outstanding loan borrowings, debentures or deposits of Rs 50 crores or more. 3 or more non executive directors (with atleast half, i.e., 2 or more independent directors) . 3. Audit Committee: Listed Companies + unlisted public c...

Ans:  In order for the independent directors to efficiently perform their role, the companies appointing them have been placed under an obligation to familiarise the independent directors with different aspects of the listed entity including: nature of the industry in which the listed entity operates; business model of the listed entity; his roles, rights, and responsibilities as an independent director; other relevant information which can include material ongoing projects, significant investments etc. (Regulation 25 of the SEBI (LODR) Regulations, 2015. It is mandatory for all independent directors of the company to meet at least once annually (without the presence of non-independent directors and members of the management) they are required to evaluate the performance of the company's chairperson, non-independent directors and the board as a whole at these special meetings. This provides the independent directors freedom to assess the company's performance and take impartial...