Section 150: Manner of selection of independent directors and maintenance of databank of independent directors
This section is for outlining how independent directors are selected and maintained in a databank for companies to use.
The section, clause by clause
What the section says
In plain terms
(1)Subject to the provisions contained in sub-section (6) of section 149, 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 be 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:
An independent director can be chosen from a databank of eligible people maintained by a body notified by the Central Government, but the company is responsible for checking the person's suitability before appointing them.
provisoProvided 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.
(2)The appointment of independent director shall be approved by the company in general meeting as provided in sub-section (2) of section 152 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.
A company's appointment of an independent director must be approved at a general meeting, with the meeting's notice explaining why the person was chosen for the role.
(3)The data bank referred to in sub-section (1), shall create and maintain data of persons willing to act as independent director in accordance with such rules as may be prescribed.
The databank must collect and maintain information on people willing to be independent directors, following rules that may be prescribed.
(4)The Central Government may prescribe the manner and procedure of selection of independent directors who fulfil the qualifications and requirements specified under section 149.
The Central Government can specify how independent directors who meet the requirements should be selected.
The right-hand column is written from the section text, not quoted from it, and it has no legal force. Where the two differ, the left-hand column is the law.
Amendment notes
- 1. Ins. by Act 29 of 2020, s. 32 (w.e.f. 18-3-2021).
This section refers to
Search the whole Act, or ask it a question, in the interactive browser.
Reproduced from the official India Code print for reference. Check the current text on India Code before you rely on it, and read the section alongside its Rules. Nothing here is legal advice.