INDEPENDENT DIRECTORS – COMPARISION BETWEEN LISTING AGREEMENT AND COMPANIES ACT, 2013.

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Change Factor Listing Agreement – Clause 49 Companies Act, 2013 – Section 149
Composition of Board
  1. If chairman is Executive Director – at least 50% of the board to be independent directors.
  2. If Chairman is non-executive Director – at least 1/3rd of the Board to be independent directors.
 In case of listed Companies, 1/3rd of directors shall be independent directors – no link with the Chairperson.
An Independent Director is not
  1. An Executive Director.
  2. A Nominee Director.
  1. A Managing Director
  2. A Whole-time Director
  3. A Nominee Director
Limit on no. of Independent Directorships
  1. Maximum limit of 7 Companies.
  2. If acting as Whole Time Director in any company – maximum limit of 3 Companies.
 No Such limit prescribed.
Gestation period for existing Independent Directors Independent Directors who have completed 5 or more years in a Company on or before 01st October, 2014 shall be eligible for one more term of 5 years only. No Such restriction provided in Companies Act for existing Directors.
Data Bank No such facility is provided in Listing Agreement Central Government may notify certain bodies or Institutions which shall contain names of individuals who are interested to act as independent Directors and Companies can appoint any person amongst them.
Declaration of Independence by Director No such declaration is required Every Independent Director shall in

  1. the First board meeting in which he participates as a director and
  2. the First board meeting of every Financial year [or]
    whenever there is a change in the circumstances which effects his independency give a declaration that he meets the criteria.
Remuneration includes Any remuneration or Compensation (over and above sitting fees) to be paid to independent Directors shall be made through a resolution passed by Shareholders.
  1. Sitting Fees
  2. Expenses incurred for attending meetings
  3. Commission on profits not exceeding limits.
  4. Not eligible for ESOP’s.
Professional Conduct, roles and duties No roles, duties and code of conduct provided in the Listing Agreement. Roles, Duties and Code of Conduct  are explicitly provided in Schedule IV of the Act.
Training of Independent Directors Training to be provided to Independent Directors to familiarize them with the Company, nature of  industry, their roles and functions in the Company.

The details of training so provided shall be disclosed in the Annual Report.

 No such concept of training is provided in the Companies Act, 2013.
Inspection and Disclosure No such requirement prescribed in Listing Agreement. Terms and Conditions of appointment of Independent Directors shall be disclosed on the Company’s website and shall be open for inspection by members at the Registered office.

 

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Disclaimer: The entire contents of this document have been developed on the basis of relevant information and are purely the views of the authors. Though the authors have made utmost efforts to provide authentic information however, the authors and the company expressly disclaim all and any liability to any person who has read this document, or otherwise, in respect of anything, and of consequences of anything done, or omitted to be done by any such person in reliance upon the contents of this document.

 

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