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Eligibility
Liabilities Max
Limits
Independent
Director
Duties Max
Tenure
Powers
Who is eligible to be Independent
Director?
Non executive director, not being a nominee director
A director who is not a promoter or related to
promoters or directors of the Company or its holding
/ subsidiary / associate company
A person who by himself or through his relatives is not
having or had any material pecuniary relationship
with Company / its holding / subsidiary / associate
company / their promoters / directors during the 2
immediately preceding financial years or current
year
Who is eligible to be Independent
Director?
A person who, in any of the 3 years immediately
preceding the financial year in which he is proposed to
be appointed, has not, directly or through his relatives,
had the following relationship with Company/holding /
subsidiary / associate company:-
KMP or employee
Share-
holder
Environ-
ment Employee
Govern-
ment Director Supplier
Society Customer
Lenders
Duty .. Not to have conflict
To give disclosure of interest in first BM of FY
To give disclosure about change in interest (either as
Director or Shareholder)
Not to involve in situation of conflict of interest
Not to deal in forward dealing in securities
No to deal in insider trading of shares of the
Company
What is disclosure of interest?
To disclose list of relatives
To disclose list of companies / firms / Trust in which
Director is owner / director / shareholder
To disclose list of firms in which his relatives has
interest
Disclosure to be given every year and whenever
there is change
Format is MBP 1
What is conflict?
Not to involve ‘self’ or ‘self benefited entity’ as
supplier or customer or in other nature
Not to have competing business with that of
company
Duty towards laws ….
To ensure compliance with all applicable laws
To ensure proper system to ensure compliance with
all laws
To ensure that compliance system is adequate
To ensure that compliance system efficiently
functioning
Stake holders protection visa a vis
compliance of laws
SHs
(Compani
es Act,
Economy SEBI) Customers
[Fema & Contracts
Customs and
laws] Ensure warrantee
compliance
of all Environmen
t
Governm applicable
(Environme
ent laws ntal Laws)
(Revenue
Laws) Employees
Company (Labour
(Corpora Laws)
te Laws)
Liabilities
Independent Directors are liable for acts / omissions
occurred with his knowledge attributable through
broad process
Penalties = monetary or imprisonment
Insurance can be taken to cover liabilities
Whether Director is liable for
liabilities of the ‘Company’?
Towards borrowed funds – yes, if personal
guarantee is given
Towards commercial liabilities – No
Towards contingent liabilities – No
Towards legal / compliance liabilities – Yes
Towards criminal liabilities – Yes, if involved either
Directly or Indirectly
How to avoid liabilities ?
Discharge all duties diligently
Ensure system is set to take care of financial controls
Ensure system is set to take care of compliance
Ensure that there is a system for preparation of
meaningful agenda
Ensure that there is a system to identify related
parties and avoid any contract without board
approval
Ensure Introduce doer .. Checker system
Thank you
MMJC