Independence of Director: Myth and Reality

INDEPENDENCE OF DIRECTOR Myth or Reality Pavan Kumar Vijay

Concept of Independent Director ,[object Object]

What is Corporate Governance???

Corporate Governance means… Fairness to all stakeholders Mutual Trust, Transparency and Togetherness Unrestricted Communication and Continuous Feedback Sharing Knowledge, Success Stories and Experience Sharing Happiness and Concerns Helping Each Other – Round the Clock

Definition of Independent Director – Clause 49 (1)(A)(iii) He has not been an executive of the company in the immediately preceding three financial years He is not associated with the statutory audit firm or the legal firm having material association with the company. He is not related to promoters or persons occupying management positions at the board level or at one level below the board He does not have any material pecuniary relationships or transactions with the company, its promoters, its directors, its senior management or its holding company, its subsidiaries and associates. He is not a material supplier, service provider or customer or a lessor or lessee of the company. He is not owning two percent or more of the block of voting shares

Definition under the Companies Amendment Bill, 2003 ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Difference between the proposed definition under the Companies Amendment Bill, 2003 and Clause 49 of Listing Agreement. Should not have been an executive of the Company in the immediately proceeding 3 financial years ,[object Object],Should not hold 2% or more shares of the company Should not hold 2% or more shares of the company, presently or in past Nominee Directors of Bank or FIs will be considered as Independent Directors Nominee Directors of Bank or FIs will not be considered as Independent Directors Appointment of Non Executive Director beyond continuous period of 9 years not permissible Should not have been a Director for continuous period of 9 years Should not be a supplier, service provider or customer of the company ,[object Object],[object Object],Should not have been an auditor, internal auditor or legal advisor or consultant of the company during any of the 3 proceeding financial years ,[object Object],Should not be relative of Chairman or MD or Whole Time Director or Secretary As per Clause 49 of L.A Companies Amendment Bill, 2003

Definition of Independent Directors raises some very fundamental issues ,[object Object],[object Object],[object Object],[object Object]

Qualifications & Disqualifications ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Appointment of Independent Director ,[object Object]

Duties & Responsibilities “Duty is what we expect of others” “The price of greatness is responsibility” ,[object Object],[object Object],[object Object],[object Object],[object Object]

Duties & Responsibilities ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Enhanced Responsibilities & Duties ,[object Object],[object Object],[object Object],[object Object]

Is an independent Director as a member of the Company Board equally responsible as the Company Board ? ,[object Object],[object Object],AN IMPORTANT QUESTION

Liabilities ,[object Object],[object Object],[object Object],[object Object],[object Object]

Rights & Authorities ,[object Object],[object Object],[object Object],[object Object],[object Object]

MYTHS-Qualities of Independent Directors ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

[object Object],[object Object],[object Object],[object Object],MYTHS-Presence of Independent Director means…

MYTHS-Presence of Independent Director means… ,[object Object],[object Object],[object Object]

Reality ,[object Object],[object Object]

Guidance for Independent Directors –The Taste and Smell Tests ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Thank You… Pavan Kumar Vijay MD, Corporate Professionals

Independence of Director: Myth and Reality

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Independence of Director: Myth and Reality