As the Company Secretary of XYZ Ltd. prepare a note for the Board of Directors regarding the selection, qualifications, remuneration and tenure of Independent Directors.

To, The Board of Directors, XYZ Ltd Sir/Madam, Sub: Note on selection, qualifications, remuneration and tenure of Independent Directors Selection: Section 150 of the Companies Act, 2013 provides that 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. The appointment of independent director shall be approved by the company in general meeting 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. Rule 4 of the Companies (Appointment and Qualifications of Directors) Rules, 2014 provides that at least two directors as independent directors are required for: the Public Companies having paid up share capital of ₹10 crore rupees or more or the Public Companies having turnover of ₹100 crore rupees or more or the Public Companies which have, in aggregate, outstanding loans, debentures and deposits, exceeding ₹50 crore rupees. Qualifications: Rule 5 of The Companies (Appointment and Qualifications of Directors) Rules, 2014 provides that An independent director shall possess appropriate skills, experience and knowledge in one or more fields of finance, law, management, sales, marketing, administration, research, corporate governance, technical operations or other disciplines related to the company's business. None of the relatives of an independent director :- is 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, for an amount of ₹50 lakhs rupees, at any time during the two immediately preceding financial years or during the current financial year. Remuneration: Section 149(9) of the Companies Act, 2013 provides that notwithstanding anything contained in any other provision of this Act, but subject to the provisions of sections 197 and 198 of the Companies Act, 2013 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 of the Companies Act, 2013, reimbursement of expenses for participation in the Board and other meetings and profit related commission as may be approved by the members. Section 197 (5) of the Companies Act, 2013 provides that a director may receive remuneration by way of fee for attending meetings of the Board or Committee thereof or for any other purpose whatsoever as may be decided by the Board. Provided that the amount of such fees shall not exceed ₹1 lakh rupees per meeting of the Board or committee thereof. Tenure: According to section 149 (10) of the Companies Act, 2013 subject to the provisions of section 152 of the Companies Act, 2013 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. Section 149(11) of the Companies Act, 2013 states that notwithstanding anything contained in section 149(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.