Companies have to replace independent directors in 90 days
13 July 2017
Companies will have to replace independent directors who resign or are removed from the board within 90 days, as per the revised provisions of the Company Law.
The ministry of corporate affairs has made amendments to Schedule IV of the Company Law, making it mandatory for companies to fill posts of independent directors within 90 days of their falling vacant, against the 180 days allowed earlier.
The government also exempted state-run companies from seeking shareholders' nod for appointing independent directors. Independent directors of government companies have also been exempted from the performance evaluation process for being reappointed after the expiry of the term.
Further, the independent directors also need not henceforth review the performance of non-independent directors of the board as a whole, or of the chairman of the board.
While the new norms are in conformity with the listing norms prescribed by market regulator Securities and Exchange Board of India (Sebi), the relaxation in performance criteria for state-run companies is unlikely to help enhance corporate governance, say experts.