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Responsibility of indepResponsibility of indep

directorsdirectors

NITESH JAI

VIJAI VERM

PRADHUMN

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DefinitionsDefinitions

y definition: that a non-execu

director is considered indep

when the board determines

director is independent in chand judgment and there are

relationships or circumstanc

could affect, or appear to af

director's judgment.

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Who are independent diWho are independent di

As per clause 49 of the listing agre

Does not have any material pecu

relationships

Should not be an executive of the

the immediately preceding three Should not be a partner or an exe

statutory audit firm or the interna

Should not be a supplier, service

customer of the company

Should not be a substantial sharecompany

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Directors under CorporaDirectors under Corpora

GovernanceGovernance

y Independent Directors

Non-management Directors

Necessarily be Non-executive

y Dependent Directors Management Directors

Can either be an Executive Di

Non-executive Director

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Selection of IndependenSelection of Independen

DirectorDirectory selection and appointment o

independent directors shoul

transparent

y

the companies should haveindependent nomination com

y the code of Corporate Gove

a company should specifica

the qualifications and attribu

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NUMBER OF INDEPENDENT DIRECTO

There should be sufficient number of non-executive bo

The Board should include a balance of executive an

directors.

The management and control of companies should

promoters who take pains to bring the company intomake it operative and profitable.

Minimum ONE-THIRD of the Board should be

independent for a company .

One third is an adequate number for ensuring a strelement on the BOARD.

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IMPORTANCE OF INDEPENDENT DIRE

Bring independent judgment on issuesperformance, resources.

Independent directors bring in objectivity to the

performance of the board and management.

Provide the assurance to all those dealing with

that the board decisions will not be based on narr

They should play a positive role in protecting th

small/minority shareholders.

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Role Of Independent DirRole Of Independent Dir

y The board is the most significant instrument of corp

y Role Of Independent Directors

The non-executive directors should:

* Contribute to and constructively challenge develostrategy.* Scrutinize management performance.* Satisfy them that financial information is accuraterobust risk management is in place.

* Meet at least once a year without the chairman or- and there should be a statement in the annual reposuch meetings have taken place.* Be prepared to attend AGMs and discuss issues re(especially chairmen of committees).* Have a greater exposure to major shareholders (pindependent director).

y Is there a better way to do it, in view of

Recent scandals of disclosures and audits

Size and scope of present day enterprise

Complexity of operations

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Responsibilities of IndepResponsibilities of Indep

DirectorsDirectorsy Independent Director shall however periodically review

reports prepared by the company as well as steps takencure any taint. In the event of any proceedings against in connection with the affairs of the company, defence son the ground that the independent director was unawa

y To function to properly according to the spirit of corporadirector on the board and as Member/Chairman acrossviz. the Audit Committee, the Shareholders Grievance Remuneration Committee of the company.

y

A director shall not be a member in more than 10 commChairman of more than five committees across all compdirector. Furthermore it should be a mandatory annual rdirector to inform the company about the committee posother companies and notify changes as and when they

y At least one independent director on the Board of Direccompany shall be a director on the Board of Directors ocompany.

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