Independent director

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

26 December 2011 Mr. X is brother in law of Mr.A director of the co. Mr. x also providing service of professionals civil contactor in a co...

Now my doubt is Mr. x can be appointed as independent director in listing co.???

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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27 December 2011 No. In the given case Mr X can not be appointed as independent director.

As per clause 49 of listing agreement....

‘Independent director’ shall mean a non-executive director of the company who:
a. apart from receiving director’s remuneration, does not have any material pecuniary relationships or transactions with the company, its promoters, its directors, its senior management or its holding company, its subsidiaries and associates which may affect independence of the director;
b. is not related to promoters or persons occupying management positions at the board level or at one level below the board;
c. has not been an executive of the company in the immediately preceding three financial years;
d. is not a partner or an executive or was not partner or an executive during the preceding three years, of any of the following:
i. the statutory audit firm or the internal audit firm that is associated with the company, and
ii. the legal firm(s) and consulting firm(s) that have a material association with the company.
e. is not a material supplier, service provider or customer or a lessor or lessee of the company, which may affect independence of the director;
f. is not a substantial shareholder of the company i.e. owning two percent or more of the block of voting shares.
g. is not less than 21 years of age

Jiten Gupta

Jiten Gupta (Expert)
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28 December 2011 i think Mr. X is the brother of wife of Mr. A so in that case he is not relative of Mr. A as per section 2(41)and 6 read with schedule 1A of company Law 1956. So Mr. X shall also not be covered under the definition of relative as per clause 49 of listing agreement.

But as Mr. X is a professional civil contractor with the company so he can not be appointed because he is having material/pecuniary relationship with the company which may affect the independency of the independent director.

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Querist : Anonymous

Querist : Anonymous (Querist)

28 December 2011 Thanks Mr. Gupta