'T' Ltd. a listed company has ₹ 20 crore paid up share capital and has nine directors on its Board. Advise T Ltd. on the following matters : The number of independent directors it should appoint on its board. How many in

Answer 5(c) As per Section 149(4) of the Companies Act 2013, every listed public company is mandatorily required to have at least one-third of the total number of directors as independent directors. T Ltd should appoint 1/3 of its total Directors as an Independent Director and accordingly has to appoint (1/3 × 9 = 3) 3 independent directors. As per Rule 4 of the Companies (Appointment and Qualification of Directors) Rules, 2014 unlisted public companies having paid up share capital of ten crore rupees or more shall have at least two independent. Hence, Two independent directors have to be appointed by T Ltd as it is an unlisted company and its paid up share capital is more than ₹ 10 crores. Section 149(10) of the Companies Act, 2013 states that subject to the provisions of Section 152, an independent director can be appointed for a term of up to five consecutive years on the Board. It has been clarified that as such while appointment of an Independent Director for a term of less than 5 years would be permissible, appointment for any term (whether for 5 years or less) is to be treated as a one term under section 149(10) of the Act. Therefore T Ltd cannot appoint an Independent Director for term of a six years in the second consecutive term. Section 149(11) of the Act, no person can hold office of Independent Director(ID) for more than two consecutive term's such a person shall have to demit office after two consecutive terms, even if the total number of years of his appointment in such two consecutive terms is less than 10 years. It is clarified by the Ministry that appointment for any term (whether 5 years or less) is to be treated as one term under section 149(10) of the Companies Act, 2013. Further, under section 149(11) of the Companies Act, 2013 no person can hold office of independent director for more than two consecutive term's such a person shall have to demit office after two consecutive terms, he shall be eligible for appointment only after the expiry of the requisite cooling -off period of 3 years. Therefore T Ltd cannot appoint an independent Director who has already completed two consecutive terms for 4 years for another period of two years.