Non rotational directors
cooling period for independent director is 3 years while the same section is saying that independent directors are non rotational .
if they are non rotational then why there is provision of cooling period?
Jatin Bajaj
(CS)
(2930 Points)
Replied 03 June 2019
As per the provisions of Section 149(10), independent Directors shall not be appointed for a period of two consequtive terms of 5 years.
And as per the Provisions of Section 149(11), after the expiration of two consequitive terms of 5 years, there shall be the gap of 3 years from ceasing of becoming independent director.
During the tennure of 3 years, such person shall not be associated with any Company either directly or indirectly.
In case of rotational directors , directors are reappointed after their fixed term without any cooling off period. But in case of Independent directors they can be reappointed only after the gap of cooling off period. Such cooling of period describes that Director is non rotational in nature.
Shrikant
(Associate)
(350 Points)
Replied 03 June 2019
Well, As per Companies Act, 2013. term of an Independent Director cannot exceed 5 years (it can be less than 5 years) at a time. But the same person can be appointed an an Independent Director for consecutive term if shareholders approve the same.
Now, after 2 consecutive terms as mentioned above, there will be cooling off period of 3 years. He cannot be associated with such a Company in any capacity including post of Independent Director. But he can be Independent Director with any other Company.
Independent Directors cannot retire by rotation. Cooling off period is provided in the Companies Act, 2013 as to protect their independence so that they will perform their duties efficiently.
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