Prapti Hotels Ltd. want to appoint Susmita as an independent director from 1st January, 2022. It came to the knowledge of Vice President (Commercial) of the company that Susmita stayed at their hotel at Ooty for three da

Section 149(6) of the Companies Act, 2013 provides that Independent Director, in relation to a company, means a director other than a managing director or a whole time director or a nominee director who has or had no 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. 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 years. Clarifications have been sought whether a transaction entered into by an 'ID' with the company concerned at par with any member of the general public and at the same price as is payable/paid by such member of Public would attract the bar of 'pecuniary relationship' under section 149(6)(c). The matter was examined and it was clarified by MCA vide its circular no. 14/2014 dated 9th June, 2014 that in view of the provisions of section 188 which take away transactions in the ordinary course of business at arm's length price from the purview of related party transactions, an 'ID' will not be said to have 'pecuniary relationship, under section 149(6)(c) in such cases. Therefore, staying of Susmita at the hotel in Ooty of Prapti Hotels Ltd. and making transactions with the company 6 months prior to her proposed appointment in the board as Independent Director cannot be termed as pecuniary relationship as those were at par with members of general public. So, the Vice President (Commercial) should be advised that Susmita can be appointed as Independent Director in the Company from 1st January, 2022.