Question

Which of the following criteria is/ are prescribed under section 149(6) of the Companies Act, 2013 for independent directors?
(1) Who in the opinion of the Board, is a person of integrity and possesses relevant industrial expertise and experience.
(2) An Individual who shall be a promoter or related to promoter of the company or its holding, subsidiary or associate company.
(3) The relatives of a person should not have any pecuniary relationship with the company or its subsidiaries, amounting to 2% or more of its gross turnover or total income or Rs. 50 lakhs or such higher amount as may be prescribed, during the two immediately preceding financial years or in the current financial year.
(4) A person who must not either directly or through any of his relatives holds together with his relatives 2% or more of the total voting power of the company.
Select the correct answer from the options given below

• A. (1), (3) & (4) is correct
• B. (3) & (4) is correct
• C. (1) & (4) is correct
• D. (1), (2), (3) & (4) is correct

Answer 1

Answer: (C)

(1) & (4) is correct

As per section 149(6) of the Companies Act, 2013, (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 pecuniary relationship 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;
  
• (d) 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;
• (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;
(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