(1) Every company shall have a Board of
Directors consisting of individuals as
directors and shall have—
(a) a minimum number of three directors
in the case of a public company, two
directors in the case of a private
company, and one director in the case
of a One Person Company; and
(b) a maximum of fifteen directors:
[Provided that a company may appoint
more than fifteen directors after
passing a special resolution:]
[Provided further that such class or
classes of companies
as may be prescribed
, shall have at least one woman
director.]
(2) Every company existing on or before
the date of commencement of this Act
shall within one year from such
commencement comply with the
requirements of the provisions of
sub-section (1).
[(3)11[Every company shall have at
least one director who stays in India
for a total period of not less than one
hundred and eighty-two days during the
financial year:
Provided that in case of a newly
incorporated company the requirement
under this sub-section shall apply
proportionately at the end of the
financial year in which it is
incorporated.]
(4) Every listed public company shall
have at least one-third of the total
number of directors as independent
directors and the Central Government
may
prescribe
the minimum number of independent
directors in case of any class or
classes of public companies.
Explanation.—For the purposes of this
sub-section, any fraction contained in
such one-third number shall be rounded
off as one.
(5) Every company existing on or before
the date of commencement of this Act
shall, within one year from such
commencement or from the date of
notification of the rules in this
regard as may be applicable, comply
with the requirements of the provisions
of sub-section (4).
(6) An independent director in relation
to a company, means a director other
than a managing director or a
whole-time director or a nominee
director,—
[(a) who, in the opinion of the Board,
is a person of integrity and possesses
relevant expertise and experience;]
(b) (i) who is or was not a promoter of
the company or its holding, subsidiary
or associate company;
(ii) who is not related to promoters or
directors in the company, its holding,
subsidiary or associate company;
(c) who has or had no 12[pecuniary
relationship, other than remuneration
as such director or having transaction
not exceeding ten per cent. of his
total income or such amount as may be
prescribed,] with the company, its
holding, subsidiary or associate
company, or their promoters, or
directors, during the two immediately
preceding financial years or during the
current financial year;]
13[(d)none of whose relatives—
(i) is holding any security of or
interest in the company, its holding,
subsidiary or associate company during
the two immediately preceding financial
years or during the current financial
year:
Provided that the relative may hold
security or interest in the company of
face value not exceeding fifty lakh
rupees or two per cent. of the paid-up
capital of the company, its holding,
subsidiary or associate company or such
higher sum as may be prescribed;
(ii) is indebted to the company, its
holding, subsidiary or associate
company or their promoters, or
directors, in excess of such amount as
may be prescribed during the two
immediately preceding financial years
or during the current financial year;
(iii) has given a guarantee or provided
any security in connection with the
indebtedness of any third person to the
company, its holding, subsidiary or
associate company or their promoters,
or directors of such holding company,
for such amount as may be prescribed
during the two immediately preceding
financial years or during the current
financial year; or
(iv) has any other pecuniary
transaction or relationship with the
company, or its subsidiary, or its
holding or associate company amounting
to two per cent. or more of its gross
turnover or total income singly or in
combination with the transactions
referred to in sub-clause (i), (ii) or
(iii);]
(e) who, neither himself nor any of his
relatives—
(i) holds or has held the position of a
key managerial personnel or is or has
been employee of the company or its
holding, subsidiary or associate
company in any of the three financial
years immediately preceding the
financial year in which he is proposed
to be appointed;
14[Provided that in case of a relative
who is an employee, the restriction
under this clause shall not apply for
his employment during preceding three
financial years.]
(ii) is or has been an employee or
proprietor or a partner, in any of the
three financial years immediately
preceding the financial year in which
he is proposed to be appointed, of—
(A) a firm of auditors or company
secretaries in practice or cost
auditors of the company or its holding,
subsidiary or associate company; or
(B) any legal or a consulting firm that
has or had any transaction with the
company, its holding, subsidiary or
associate company amounting to ten per
cent. or more of the gross turnover of
such firm;
(iii) holds together with his relatives
two per cent. or more of the total
voting power of the company; or
(iv) is a Chief Executive or director,
by whatever name called, of any
nonprofit organisation that receives
twenty-five per cent. or more of its
receipts from the company, any of its
promoters, directors or its holding,
subsidiary or associate company or that
holds two per cent. or more of the
total voting power of the company; or
(f) who possesses such other
qualifications
as may be prescribed
.
(7) Every independent director shall at
the 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
whenever there is any change in the
circumstances which may affect his
status as an independent director, give
a declaration that he meets the
criteria of independence as provided in
sub-section (6).
Explanation.—For the purposes of this
section, “nominee director” means a
director nominated by any financial
institution in pursuance of the
provisions of any law for the time
being in force, or of any agreement, or
appointed by any Government, or any
other person to represent its
interests.
(8) The company and independent
directors shall abide by the provisions
specified in
Schedule IV
.
(9) Notwithstanding anything contained
in any other provision of this Act, but
subject to the provisions of
sections 197
and
198,
an independent director shall not be
entitled to any stock option and may
receive remuneration by way of fee
provided under sub-section (5) of
section 197,
reimbursement of expenses for
participation in the Board and other
meetings and profit related commission
as may be approved by the members.
(10) Subject to the provisions of
section 152,
an independent director shall hold
office for
a term
up to five consecutive years on the
Board of a company, but shall be
eligible for reappointment on passing
of a special resolution by the company
and disclosure of such appointment in
the Board's report.
(11) Notwithstanding anything contained
in sub-section (10), no independent
director shall hold office for more
than two consecutive terms, but such
independent director shall be
eligible for appointment after the
expiration of three years of ceasing to
become an independent director:
Provided that an independent director
shall not, during the said period of
three years, be appointed in or be
associated with the company in any
other capacity, either directly or
indirectly.
Explanation.—For the purposes of
sub-sections (10) and (11), any
tenure of an independent director
on the date of commencement of this Act
shall not be counted as a term under
those sub-sections.]
(12) Notwithstanding anything contained
in this Act,—
(i) an independent director;]&
(ii) a non-executive
director
not being promoter or key managerial
personnel, shall be held liable, only
in respect of such acts of omission or
commission by a company which had
occurred with his knowledge,
attributable through Board processes,
and with his consent or connivance or
where he had not acted diligently.
(13) The provisions of sub-sections (6)
and (7) of
section 152
in respect of retirement of directors
by rotation shall not be applicable to
appointment of independent directors.]
Exceptions/ Modifications/
Adaptations
1. In case of Section 8 company -
Section 149 (1) and the first Proviso
to Sub-section (1) shall not apply -
Notification dated 5th june, 2015.
2. In case of Section 8 company -
Sub-sections (4), (5),(6), (7), (8),
(9), (10) , (11), Clause (i) of
sub-section (12) and Sub-section (13)
of Section 149 shall not apply. -
Notification dated 5th june, 2015.
3. In case of Government company -
Section 149(1)(b) and the first Proviso
to Sub-section (1) shall not apply . -
Notification dated 5th june, 2015.
4. In case of Government company, in
clause (a) of sub-section (6) of
Section 149, for the word "Board", the
words "Ministry or Department of the
Central Government which is
administratively in charge of the
company, or, as the case may be, the
State Government" shall be substituted.
-
Notification dated 5th june, 2015.
5. In case of Government company -
clause (c) of Sub-section (6) shall not
apply. -
Notification dated 5th june, 2015.
6. In case of
Specified IFSC Public Company
- Sub- sections (4) to (11), clause (i)
of subsection (12) and sub-section (13)
of section 149 shall not apply. -
Notification Dated 4th January 2017
.
7. In case of
Specified IFSC Public Company
- Sub- section (3) of section 149, the
following proviso shall be inserted,
namely:-
“Provided that this sub-section shall
apply to a
Specified IFSC public company
in respect of financial years other
than the first financial year from the
date of its incorporation.”. -
Notification Dated 4th January 2017
.
8. In case of
Specified IFSC Public Company
- Second proviso to Sub-section (1) of
section 149 shall not apply .-
Notification Dated 4th January 2017
.
9. In case of
Specified IFSC Private Company
- Sub- section (3) of section 149, the
following proviso shall be inserted,
namely:-
“Provided that this sub-section shall
apply to a
Specified IFSC private company
in respect of financial years other
than the first financial year from the
date of its incorporation.”. -
Notification Dated 4th January 2017
.
10. In case of Section 8 Company-
Clause (b) and First proviso to
sub-section (1) of Section 149 shall
not apply -
Notification Dated 13th June, 2017
.
For Entry no. 8 i
n
Exceptions/ Modifications/
Adaptations Dated 5th June, 2015
(
Section 149 (1) and the first Proviso
to Sub-section (1) shall not apply" )
the following entry shall be
subtituted
-" Clause (b) and first proviso to
sub-section (1) of Section 149 shall
not apply" -
Notification Dated 13th June, 2017
Amendments:
11.Substituted by
the Companies (Amendment) Act,
2017
-
Amendment Effective From 7th May
2018
In section 149, for sub-section (3) for
the words:-
Every company shall have at least one
director who has stayed in India for a
total period of not less than one
hundred and eighty-two days in the
previous calendar year
the following clause shall be
substituted, namely :-
"Every company shall have at least one
director who stays in India for a total
period of not less than one hundred and
eighty-two days during the financial
year:
Provided that in case of a newly
incorporated company the requirement
under this sub-section shall apply
proportionately at the end of the
financial year in which it is
incorporated.";
12.Substituted by
the Companies (Amendment) Act,
2017
-
Amendment Effective From 7th May
2018
in sub-section (6), clause (c),for the
words:-
"pecuniary relationship"
the following Clause shall be
substituted, namely :-
"pecuniary relationship, other than
remuneration as such director or having
transaction not exceeding ten per cent.
of his total income or such amount as
may be prescribed,"
13.Substituted by
the Companies (Amendment) Act,
2017
-
Amendment Effective From 7th May
2018
in sub-section (6), clause (d),for the
words:-
none of whose relatives has or had
pecuniary relationship or transaction
with the company, its holding,
subsidiary or associate company, or
their promoters, or directors,
amounting to two per cent. or more of
its gross turnover or total income or
fifty lakh rupees or such higher amount
as may be prescribed, whichever is
lower, during the two immediately
preceding financial years or during the
current financial year;
the following Clause shall be
substituted, namely :-
[none of whose relatives—
(i) is holding any security of or
interest in the company, its holding,
subsidiary or associate company during
the two immediately preceding financial
years or during the current financial
year:
Provided that the relative may hold
security or interest in the company of
face value not exceeding fifty lakh
rupees or two per cent. of the paid-up
capital of the company, its holding,
subsidiary or associate company or such
higher sum as may be prescribed;
(ii) is indebted to the company, its
holding, subsidiary or associate
company or their promoters, or
directors, in excess of such amount as
may be prescribed during the two
immediately preceding financial years
or during the current financial year;
(iii) has given a guarantee or provided
any security in connection with the
indebtedness of any third person to the
company, its holding, subsidiary or
associate company or their promoters,
or directors of such holding company,
for such amount as may be prescribed
during the two immediately preceding
financial years or during the current
financial year; or
(iv) has any other pecuniary
transaction or relationship with the
company, or its subsidiary, or its
holding or associate company amounting
to two per cent. or more of its gross
turnover or total income singly or in
combination with the transactions
referred to in sub-clause (i), (ii) or
(iii);]
14.Inserted by The Companies
(Amendment)Act,2017-
Amendment Effective From 7th May
2018
|