Section 150 of Companies Act, 2013 – Manner of selection of independent directors and maintenance of data bank of independent directors

  • Updated Till : June 22, 2017

SECTION 150. MANNER OF SELECTION OF INDEPENDENT DIRECTORS AND MAINTENANCE OF DATABANK

OF INDEPENDENT DIRECTORS

[Effective from 1st April, 2014]

EXEMPTIONS

Section 150 shall not apply to a Section 8 Company, vide Notification No. 466(E) dated 5th June, 2015.

(1) Subject to the provisions contained in sub-section (5) of section 149, an independent director may be selected from a data bank containing names, addresses and qualifications of persons who are eligible and willing to act as independent directors, maintained by any body, institute or association, as may by notified by the Central Government, having expertise in creation and maintenance of such data bank and put on their website for the use by the company making the appointment of such directors:

Provided that responsibility of exercising due diligence before selecting a person from the data bank referred to above, as an independent director shall lie with the company making such appointment.

(2) The appointment of independent director shall be approved by the company in general meeting as provided in sub-section (2) of section 152 and the explanatory statement annexed to the notice of the general meeting called to consider the said appointment shall indicate the justification for choosing the appointee for appointment as independent director.

(3) The data bank referred to in sub-section (1), shall create and maintain data of persons willing to act as independent director in accordance with such rules as may be prescribed.

(4) The Central Government may prescribe the manner and procedure of selection of independent directors who fulfil the qualifications and requirements specified under section 149.

Applicable Rules

Companies (Appointment and Qualification of Directors) Rules, 2014

[Effective from 1st April, 2014]

Rule 6. Creation and maintenance of databank of persons offering to become independent directors.—(1) Any body, institute or association (hereinafter to be referred as “the agency”), which has been authorised in this behalf by the Central Government shall create and maintain a data bank of persons willing and eligible to be appointed as independent director and such data bank shall be placed on the website of the Ministry of Corporate Affairs or on any other website as may be approved or notified by the Central Government.

(2) The data bank referred to in sub-rule (1) shall contain the following details in respect of each person included in the data bank to be eligible and willing to be appointed as independent director—

(a) DIN (Director Identification Number);

(b) the name and surname in full;

(c) [***][1]

(d) the father’s name [***][2];

(e) the date of Birth;

(f ) gender;

(g) the nationality;

(h) the occupation;

(i) full Address with PIN Code (present and permanent);

(j) phone number;

(k) e-mail id;

(l) the educational and professional qualifications;

(m) experience or expertise, if any;

(n) any legal proceedings initiated or pending against such person;

(o) the list of limited liability partnerships in which he is or was a designated partner along with—

(i) the name of the limited liability partnership;

(ii) the nature of industry; and

(iii) the duration-with dates;

(p) the list of companies in which he is or was director along with—

(i) the name of the company;

(ii) the nature of industry;

(iii) the nature of directorship – Executive or Non-executive or Managing Director or Independent Director or Nominee Director; and

(iv) duration – with dates.

(3) A disclaimer shall be conspicuously displayed on the website hosting the databank that a company must carry out its own due diligence before appointment of any person as an independent director and “the agency” maintaining the databank or the Central Government shall not be held responsible for the accuracy of information or lack of suitability of the person whose particulars form part of the databank.

(4) Any person who desires to get his name included in the data bank of independent directors shall make an application to the “agency”.[***][3].

(5) The agency may charge a reasonable fee from the applicant for inclusion of his name in the data bank of independent directors.

(6) Any person who has applied for inclusion of his name in the data bank of independent directors or any person whose name appears in the data bank, shall intimate to the agency about any changes in his particulars within fifteen days of such change.

(7) The databank posted on the website shall—

(a) be accessible at the specified website;

(b) be substantially identical to the physical version of the data bank;

(c) be searchable on the parameters specified in sub-rule (2);

(d) be presented in a format or formats convenient for both printing and viewing online; and

(e) contain a link to obtain the software required to view or print the particulars free of charge.

[1] Clause (c) omitted by the Companies (Appointment and Qualification of Directors) Amendment Rules, 2014 vide Notification No. G.S.R. 671(E) dated 18th September, 2014. Prior to omission it read as: (c) income-tax PAN.

[2] The words “and mother’s name and Spouse’s name (if married)” omitted by the Companies (Appointment and Qualification of Directors) Amendment Rules, 2014 vide Notification No. G.S.R. 671(E) dated 18th September, 2014.

[3] The words “in Form DIR-1” omitted by the Companies (Appointment and Qualification of Directors) Amendment Rules, 2014 vide Notification No. G.S.R. 671(E) dated 18th September, 2014.

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