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Which company needs to appoint Independent Director & How?
Independent director (ID) is a symbol of best corporate governance practices in the Company.
Certain Listed & other specified Companies are required to appoint number of ID’s corresponding to their board’s strength. ID is a person carrying good standing & reputation, having specified qualification, eligibility and experience. ID needs to be a non- related independent person, appointed to protect the interest of Stakeholders in the Company. MCA has provided list of ID available for induction on its website. Any eligible person having prescribed qualifications is required to complete online examination can enrol as ID on MCA.
ID is usually invited by the promoters on the Board of the Company to occupy the position as such. Shareholders are required to approve the appointment of ID. Initial appointment is for maximum period of 5 years with facility of consecutive renewal for one more term. ID has specified functions, duties & powers in the Board process & in stakeholder’s related decision making function of the Company.
ID is usually remunerated through payment of sitting fees for attending meetings. ID reviews the performance of the Board and Executive Chairman of the Company.
Companies (not required to appoint ID) in order to achieve excellence in governance & compliances can think of inducting ID’s on their Board. ID could extend greater guidance for business management, if has domain knowledge about the Company.
If you wish to become an independent director or wish to get guidance & support for functioning as Independent director or if you wish to induct ID in your company, please check our smart solutions by connecting to our Biz Smart Executive