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Directors?

Pankaj Arora (Learner) (3134 Points)

30 November 2011

Dear All

Please let me know what is independent director , non-executive director and executive director?

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5 Replies

SkDash (CS (Member) CWA (Final)) (909 Points)
Replied 30 November 2011

Pankaj

Executive Directors are those who are on roll of the company. they are the directors cum employee of the company and will get salary as usual.

Non-executive directors are those who are not executive directors.

Coming to independent, are those who having no business, financial and other relationship (which may impact decision making) with the Company nor promotors and their relatives.

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CA Himanshu Khurana (Chartered Accountant) (813 Points)
Replied 30 November 2011

none directors are independent.

they are bounded by board & Shareholder

SkDash (CS (Member) CWA (Final)) (909 Points)
Replied 30 November 2011

himanshu- obviously majority will stand but independent director is a person who is not influenced by any other relationship.

Smriti Dhawan (Company Secretary ) (347 Points)
Replied 30 November 2011

INDEPENDENT DIRECTOR

The term "independent director" is not defined anywhere in the Companies Act, 1956. Hence it is to be presumed that this provision would adopt the definition given in Clause 49 of the Listing Agreement.

For the purpose of the sub-clause (ii), the expression ‘independent director’ shall mean a non executive director of the company who:

1) apart from receiving 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

2) is not related to promoters or persons occupying management positions at the board level or at one level below the board;

3) has not been an executive of the company in the immediately preceding three financial years

4) 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

5) is not a material supplier, service provider or customer or a lessor or lessee of the company, which may affect independence of the director;

6) is not a substantial shareholder of the company i.e. owning two percent or more of the block of voting shares.

7) is not less than 21 years of age

Only NON Executive Director of the Company can be Independent Director if the he comply the above conditions

EXECUTIVE DIRECTOR

A Director who is engaged in Company whole time is treated as executive director, executive directors are involved in day to day working of the company. Whole Time Director and Managing Director comes under the category of Executive Director.

NON EXECUTIVE DIRECTOR

Non Executive Director is not involved in day to day working of the company. Non executive Director are paid by way of Sitting fees for the Board Meeting attended by them , if Company wants to pay remuneration to Non Executive Director, the approval from Central Government is required as provided in Section 309 of Companies Act, 1956.