Special requirements for public companies for appoint of independent directors and women directors

The new companies Act has imposed additional requirements with respect to appointment of independent directors and women directors on public companies (whether they are listed or not).

All listed companies are required to appoint special categories of directors like independent directors, small shareholders directors and woman directors in the Board. Some of these requirements even apply to unlisted public companies, if certain share capital, debt or turnover thresholds are exceeded.

Independent director- All listed public companies must appoint independent directors (i.e., those who are not related to the company) as per the SEBI (listing obligations and Disclosure Requirements) Regulation, however, the proportion of independent directors cannot fall below more than one-third of the total directors, for better transparency and good governance

Unlisted public companies must appoint at least two independent directors in the following circumstances:

1.    If their paid-up share capital exceeds Rs. 10 crores.

2.     If their turnover exceeds Rs. 100 crores.

3.    If the aggregate of all the outstanding loans, debentures and deposits exceeds Rs. 50 crores.

Woman director- All listed companies and other companies having a paid-up share capital of more than Rs. 100 crores or turn-over of more than three hundred crores must appoint at least one woman director.

Director appointed by minority shareholders- To have a fair representation of the minority shareholders in a listed company (a shareholder having shares whose nominal value is less than twenty thousand rupees ), the minority shareholders may elect one director. Notice of such election must be given by at least 1000 small shareholders or 1/10^th of the total number small shareholders, whichever is lesser, to the company.

 

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