The Ministry of Corporate Affairs (hereinafter referred to as “MCA”) has amended the Companies (Appointment and Qualification of Directors) Rules, 2014 (hereinafter referred to as “Parent Rules”) and introduced the Companies (Appointment and Qualification of Directors) Second Amendment Rules, 2018 (hereinafter referred to as “Amendment Rules”) vide notification no. G.S.R 431(E) dated May 7, 2018. The Amendment Rules provides for additional criteria for appointment of independent director.
Appointment of independent directors
The qualification required for appointment of independent directors as laid down in the Parent Rules is that an independent director shall possess appropriate skills, experience and knowledge in or more fields of finance, law, management, sales, marketing, administration, research, corporate governance, technical operations or other disciplines related to the company’s business.
The Amendment Rules have introduced an additional qualification for independent directors which states that none of the relatives of an independent director shall
- Be indebted to the company, its holding, subsidiary or associate company or their promoters, or directors; or
- 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.