RULES FRAMED UNDER COMPANIES ACT, 2013
Companies (Appointment and Qualification of Directors) Rules, 2014
Number of independent directors (rule 4)
4. The following class or classes of companies shall have at least two directors as independent directors
| (i) | the Public Companies having paid up share capital of ten crore rupees or more; or | |
| (ii) | the Public Companies having turnover of one hundred crore rupees or more; or | |
| (iii) | the Public Companies which have, in aggregate, outstanding loans, debentures and deposits, exceeding fifty crore rupees : |
Provided that in case a company covered under this rule is required to appoint a higher number of independentdirectors due to composition of its audit committee, such higher number of independent directors shall be applicable to it :
Provided further that any intermittent vacancy of an independent director shall be filled-up by the Board at the earliest but not later than immediate next Board meeting or three months from the date of such vacancy, whichever is later :
Provided also that where a company ceases to fulfil any of three conditions laid down in sub-rule (1) for three consecutive years, it shall not be required to comply with these provisions until such time as it meets any of such conditions;
Explanation.—For the purposes of this rule, it is hereby clarified that, the paid up share capital or turnover or outstanding loans, debentures and deposits, as the case may be, as existing on the last date of latest audited financial statements shall be taken into account :
Provided that a company belonging to any class of companies for which a higher number of independentdirectors has been specified in the law for the time being in force shall comply with the requirements specified in such law.
Qualifications of independent director (rule 5)
5. An independent director shall possess appropriate skills, experience and knowledge in one or more fields of finance, law, management, sales, marketing, administration, research, corporate governance, technical operations or other disciplines related to the company’s business.
Creation and maintenance of databank of persons offering to become independent directors (rule 6)
6. (1) Any body, institute or association (hereinafter to be referred as “the agency”), which has been authorised in this behalf by the Central Government shall create and maintain a databank of persons willing and eligible to be appointed as independent director and such databank shall be placed on the website of the Ministry of Corporate Affairs or on any other website as may be approved or notified by the Central Government.
(2) The data bank referred to in sub-rule (1) shall contain the following details in respect of each person included in the data bank to be eligible and willing to be appointed as independent director—
| (a) | DIN (Director Identification Number); | |
| (b) | the name and surname in full; | |
| (c) | income-tax PAN; | |
| (d) | the father’s name and mother’s name and Spouse’s name (if married); | |
| (e) | the date of Birth; | |
| (f) | gender; | |
| (g) | the nationality; | |
| (h) | the occupation; | |
| (i) | full Address with PIN Code (present and permanent); | |
| (j) | phone number; | |
| (k) | e-mail id; | |
| (l) | the educational and professional qualifications; | |
| (m) | experience or expertise, if any; | |
| (n) | any legal proceedings initiated or pending against such person; | |
| (o) | the list of limited liability partnerships in which he is or was a designated partner along with— |
| (i) | the name of the limited liability partnership; | |
| (ii) | the nature of industry; and | |
| (iii) | the duration- with dates; |
| (p) | the list of companies in which he is or was director along with— |
| (i) | the name of the company; | |
| (ii) | the nature of industry; | |
| (iii) | the nature of directorship – Executive or Non-executive or Managing Director or IndependentDirector or Nominee Director; and | |
| (iv) | duration – with dates. |
(3) A disclaimer shall be conspicuously displayed on the website hosting the data bank that a company must carry out its own due diligence before appointment of any person as an independent director and “the agency” maintaining the data bank or the Central Government shall not be held responsible for the accuracy of information or lack of suitability of the person whose particulars form part of the databank.
(4) Any person who desires to get his name included in the databank of independent directors shall make an application to “the agency” in Form DIR-1.
(5) The agency may charge a reasonable fee from the applicant for inclusion of his name in the databank ofindependent directors.
(6) Any person who has applied for inclusion of his name in the databank of independent directors or any person whose name appears in the databank, shall intimate to the agency about any changes in his particulars within fifteen days of such change.
(7) The databank posted on the website shall—
| (a) | be accessible at the specified website; | |
| (b) | be substantially identical to the physical version of the databank; | |
| (c) | be searchable on the parameters specified in sub-rule (2); | |
| (d) | be presented in a format or formats convenient for both printing and viewing online; and | |
| (e) | contain a link to obtain the software required to view or print the particulars free of charge. |