TMI BlogClarifications on Rules prescribed under the Companies Act, 2013 Matters relating to appointment and qualifications of directors and Independent Directors reg.X X X X Extracts X X X X X X X X Extracts X X X X ..... entations from Industry Chambers, Professional Institutes and other stakeholders seeking clarifications inter alia about appointment of Independent Directors (IDs) under the relevant provisions of the Companies Act, 2013 (Act) read with relevant rules with effect from 1 St April, 2014. The representations have been examined and clarifications on the following points are hereby given:- (i) Section 149(6)(c): pecuniary interest in certain transactions :- (a) This provision inter alia requires that an ID should have no pecuniary relationship ' with the company concerned or its holding/ subsidiary/ associate company and certain other categories specified therein during the current and last two preceding financial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntment of 'IDs' : Clarification has been sought if 'IDs' appointed prior to April 1, 2014 may continue and complete their remaining tenure, under the provisions of the Companies Act, 1956 or they should demit office and be re-appointed (should the company so decide) in accordance with the provisions of the new Act. The matter has been examined in the light of the relevant provisions of the Act, particularly section 149(5) and 149(10) (11) . Explanation to section 149 (11) clearly provides that any tenure of an 'ID' on the date of commencement of the Act shall not be counted for his appointment/ holding office of director under the Act. In view of the transitional period of one year provid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugh letter of appointment :- With reference to Para IV(4) of Schedule IV of the Act (Code for IDs) which requires appointment of IDs' to be formalized through a letter of appointment, clarification has been sought if such requirement would also be applicable for appointment of existing 'IDs'? The matter has been examined. In view of the specific provisions of Schedule IV, appointment of 'IDs' under the new Act would need to be formalized through a letter of appointment. This issues with the approval of the competent authority. Yours faithfully (Kamna Sharma) Assistant Director Copy to:- 1. e-Governance Section and Web Contents Officer to place this circular on the Ministry's webs ..... X X X X Extracts X X X X X X X X Extracts X X X X
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