In
this post, important changes relating to introduction of Independent Directors (IDs) in the new Companies Act, 2013 would be discussed. [For an analysis & discussion
of M&A and Corporate Restructuring in the ‘new act’, kindly click here].
Now,
the primary role of corporate governance is always to ensure the independence
of the board of directors (BOD) in a company. Independent directors on the
board predominantly enhance the monitoring and supervising of the management
and the promoters of a company. Thus is turning immensely helps in protecting and safeguarding the
interests of the public shareholders. The new Companies Act, 2013 on one hand
bestows independent directors with greater say in corporate governance & on
the other hand places greater demand from them. Now, the relevant provisions
concerning IDs in the new act are Section 149, 150 and Schedule IV. The primary
features concerning Independent directors (IDs) in the new Companies Act, 2013 are as
follows-
Number of
Independent Directors
The
new Companies Act, 2013 requires all the listed companies to have at least
1/3rd independent directors on their board. But this provision of the Act is a
slight departure from clause 49 of the listing agreement. Clause 49 of the
Listing agreement issued by SEBI requires that at least 50% of the Board of
Directors (BOD) must comprise of Independent Directors in case the chairperson
is in an executive capacity or a promoter or related to a promoter. Now, one
thing which must be noted is that the listed companies will be required to
comply with the more onerous of the two requirements, while others can merely
comply with the company law. The consequences of violation may also be different
under company law and securities regulation i.e. under clause 49 of the listing agreement.
