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Section 149(4) of the Companies Act, 2013 requires independent directors in every listed public…

Section 149(4) requires independent directors to make up at least one third of a listed public company’s board. Subject to section 149(6), section 150(1) permits selection…

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Section 149(4) of the Companies Act, 2013 requires independent directors in every listed public company. Which selection resource does section 150(1) identify for eligible candidates?

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Answer and explanation

Correct answer C

Section 149(4) requires independent directors to make up at least one third of a listed public company’s board. Subject to section 149(6), section 150(1) permits selection from a databank of eligible and willing persons maintained by a body, institute or association notified by the Central Government. The company must exercise due diligence before selecting a candidate. Appointment is subject to company approval in general meeting under section 150(2).

Option feedback

Option A

Section 150(1) identifies a notified databank. It gives no list-providing role to the Company Law Board.

Option B

Section 150(1) provides for a databank maintained by a notified body, institute or association. It does not name a ministry list.

Option C

Section 150(1) identifies the databank of eligible and willing candidates, subject to the eligibility requirements in section 149(6).

Option D

Company approval in general meeting under section 150(2) is a separate step. The selection resource described in section 150(1) is the databank.

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