As per the current rule,. the independent directors can be removed by way of an ordinary resolution – the approval of minimum 50 per cent shareholders of a particular company.
Taking cognizance of recent boardroom battles, Security and Exchange Board of India (Sebi) has proposed to tighten the regulatory framework for corporate governance, which includes the appointment and removal of independent directors.
According to media reports, a high-level committee is going through the corporate governance issues, which is expected to be discussed at the Sebi board meeting later this month.
Sebi chairman Ajay Tyagi, In April, said "independent directors are not independent", stressing that developing good corporate governance practice is a focus area for the market watchdog.
As per current rules, the appointment of an independent director is done with a special resolution, which requires the approval of at least three-fourth of its total shareholders.
However, on the contrary, the independent directors can be removed by way of an ordinary resolution – the approval of 50 per cent shareholders of a particular company.
Media reports quoting sources say the regulator wants to make it special resolution mandatory for removal of an independent director – a move that will reduce the arbitrariness of promoters in deciding upon the removal of such directors.
Source: Media reports
Wednesday, June 14, 2017