INDEPENDENT

DIRECTOR
A COMPANY LAW PROJECT

MADE BY:
D.V.S.SURAJ
ROLL NUMBER - 1782045
B.B.A. LLB. “A”; 5TH SEMESTER
 :ACKNOWLEDGEMENT:

“It is not possible to prepare a project report without the assistance and
encouragement of the other people . This one is certainly no exception”

On the very outset of this report , I would like to extend my sincere and
heartfelt obligation towards all the personage who have helped me in this
endeavor. Without their active guidance, help, cooperation and encouragement,
I would not have made headway in this project.
I am ineffably indebted to ma’am “ Diya Sarkar” for conscientious guidance
and encouragement to accomplish this assignment. I am extremely thankful
and pay my gratitude to them for her valuable guidance and support on
completion of this project in its presently.
I also acknowledge with a deep sense of reverence, my gratitude towards my
parents and members of my family, who has always supported me morally and
economically.
At last but not least gratitude goes to my friends who directly or
indirectly helped me to complete this project report.
Any omission in this brief acknowledgement does not mean lack of gratitude.

Thanking You

D.V.S.SURAJ
 :Independent Director:

The Companies Act,1956 does not provide us any specific definition of an

Independent Director.But Independent Directors are in the limelight as per the
Companies Act, 2013. A separate criterion has been established for the companies to
have an Independent Director.
Basically, we can say that an independent director is a non-executive director of a
company who helps the company in improving corporate credibility and governance
standards. He/ She does not have any kind of relationship with the company that may
affect the independence of his/ her judgment.
The term “Independent Director” has been defined in the Act, along with several new
requirements relating to new requirements relating to their appointment, duties, role,
and responsibilities. The provisions relating to appointment of Independent directors
are contained in Section 149 of the Companies Act, 2013 should be read along with
Rule 4 and Rule 5 of the Companies (Appointment and Qualification of Directors)
Rules, 2014
Applicability On Appointing An Independent Director
 Listed Public Company
Every listed public company shall have
at least one-third of a total number of directors as independent directors.
Any fraction contained in that one-third shall be rounded off as one.
 Unlisted Public Company
The Central Government may prescribe the minimum number of independent
directors in case of any class(es) of public companies.
As per Rule 4 of the Companies (Appointment and Qualification of Directors) Rules,
2014, the following classes of companies shall have at least 2 directors as independent
directors.
 Public Companies with paid-up share capital of  Rs. 10 crores or more.
 Public Companies with turnover of  Rs. 100 crore or more.
 Public Companies with aggregate outstanding loans, debentures, and
deposits, exceeding  Rs. 50 crore
Every independent director shall, at first meeting of the board in which he
participates as a director and thereafter at the first meeting of the Board in every
financial year or when a situation arise which effects his status of independence
The terms and conditions of appointment of independent directors shall also be
posted on the company’s website.
Role of an Independent Director
Independent Director acts as a guide, coach, and mentor to the Company. The role
includes improving corporate credibility and governance standards by working as a
watchdog and help in managing risk. Independent directors are responsible for
ensuring better governance by actively involving in various committees set up by
company
The independent directors are required because they perform the following
important role :
1) facilitate withstanding and countering pressures from owners;
2) fulfill a useful role in succession planning;
3) on issues such as strategy, performance, risk management, resources, key
appointments and standards of conduct he must support in gaining
independent judgment to bear on the board’s deliberations
4) while evaluating the performance of board and management of the company
 bring an objective view
5) scrutinizing, monitoring and reporting management’s performance regarding
goals and objectives agreed in the board meetings
6) safeguard the interests of all stakeholders, particularly the minority
shareholders;
7) balance the conflicting interest of the stakeholders;
8) satisfying themselves that financial controls and systems of risk management
are in operation and check on the integrity of financial information
9) in situations of conflict between management and shareholder’s interest, aim
towards the solutions which are in the best interest of the company
10) establishing the suitable levels of remuneration of
 executive directors,
 key managerial personnel
 senior management
Duties of an Independent Director
The Independent Directors shall :
1) undertake appropriate induction and regularly update and refresh their skills,
knowledge, and familiarity with the company
2) attempt to attend company’s  general meetings
3) attempt to attend BOD’s meetings and board committees meeting being a
member
4) have adequate knowledge about the company and the external environment
in which it operates
5) report matters concerning the unethical behavior, actual or suspected fraud or
violation of the company’s code of conduct or ethics policy
6) acting within his authority, assist in protecting the legitimate interests of the
company, shareholders and its employees
7) not to unfairly obstruct the functioning of the company or committee of the
Board
8) participate in the Board’s committee being chairpersons or members of that
committee
9) not to disclose confidential information, including commercial secrets,
technologies, advertising and sales promotion plans, unpublished price
sensitive information, unless such disclosure is expressly approved by the
Board or required by law
10) ascertain and ensure that the company has an adequate and functional vigil
mechanism and to ensure that the interests of a person who uses such
mechanism are not prejudicially affected on account of such use.
Other Provisions related to Independent Directors under Companies Act, 2013:
1) Companies that trigger the conditions of Corporate Social Responsibility
Committee of the Board to formulate and monitor the CSR policy of a
Company. The Companies Act, 2013 requires the CSR Committee to consist
of at least three directors, including at least one independent director.
2) Where a company is not required to appoint an independent director, it shall
have in its Corporate Social Responsibility Committee two or more directors.
3) Independent director’s appointment process must be independent of the
company’s management. Databank may be used to appoint an independent
director
4) Every independent director shall give a declaration that he meets the criteria
of independence when :
  he attends the first board meeting as a director;
 in every financial year, at the first meeting of the board of directors
 when a situation arises which affects his status of independence being an
independent director
5) The independent director shall be appointed for a maximum term of 5 years.
The term shall not be more than 2 consecutive terms. He shall be re-
appointed only by special resolution by the company.