社外取締役の選任、役割、義務および責任

An independent director, a non-executive director having professional expertise and no pecuniary relationship with management or promoters is a very vital source of providing independent advisory and guidance to the board of directors of a company.

The role of independent directors came into focus when the country faced major scams like Satyam, DHFL, etc. Consequently, several changes were made in legislation to enhance the role and duties of independent directors to enable them to contribute to better corporate governance.

Independent directors are part of the board itself and various committees like audit committee, risk management committee, etc, and hence, a participator in major working and decisions of a company relating to financial statements or financial transactions or legal and regulatory compliances, etc. Thus, it is essential that an independent director must know what is his/her role and responsibilities on his/her shoulder once being occupying that position.

This article will give insights of the due diligence to be done before joining as an independent director, the manner of appointment, and the role and responsibilities to be fulfilled once you get on board in a company.

1. Who is Independent Director and what are the eligibility criteria to appoint an Independent Director

As per Section 149(6) of the Companies Act, 2013, “Independent Director”  means a director, other than the Managing Director or Whole Time Director or Nominee Director of the company, who does not have any of the following relationship or transaction with the Company, Holding Company, Subsidiary Company or Associate Company (“The Group”):

1. who is not or was not a promoter of the group;
2. who is not related to promoters or Directors of the group;
3. who has or never had any pecuniary relationship, other than remuneration or had a transaction not exceeding 10% of his total income, with the group or their promoters, or Directors, during the 2 immediately preceding financial years or during the current financial year
4. None of whose relatives—
   • is holding any security or interest during the 2 immediately preceding financial years or during the current financial year in the group. However, relative may hold security or interest in the company of face value not exceeding INR 50,00,000 or 2% of the paid-up capital of the company, its holding, subsidiary or associate company, or such higher sum as may be prescribed;
   • is indebted to the group or their promoters, or Directors, in excess of such amount as may be prescribed during the 2 immediately preceding financial years or during the current financial year;
   • has given a guarantee or provided any security in connection with the indebtedness of any third person to the group or their promoters, or Directors, for such amount as may be prescribed during the 2 immediately preceding financial years or during the current financial year; or
   • has any other pecuniary transaction or relationship amounting to 2% or more of its gross turnover or total income 

5. Who and none of his relatives —
   • holds or has ever held the position of key managerial personnel or is or has been an employee in any 3 preceding financial years in which he is proposed to be appointed. However, where the relative is an employee, the restriction under this clause shall not apply to his employment during the preceding 3 financial years
   • is or has been an employee or proprietor or a partner in any of the following firms in any of the 3 preceding financial years:
     • a firm of auditors or company secretaries in practice or cost auditors of the group company; or
     • any legal or consulting firm that has or had any transaction amounting to 10% or more of the gross turnover of such firm with the group company ;
     • holds together with his relatives 2% or more of the total voting power of the company; or
     • is a Chief Executive or director, by whatever name called, of any nonprofit organization that receives 25% or more of its receipts from the company, any of its promoters, Directors, or its holding, subsidiary, or associate company or that holds 2% or more of the total voting power of the company; or

Independent directors must have other qualifications as may be prescribed.

2. What is the purpose of the appointment of an Independent Director

• A Company runs with funds of thousands of shareholders and such funds are entrusted to the directors. Shareholders have no knowledge about how the company runs.
• To protect their interest, a director is appointed who is not connected or associated with the company in any way. He is appointed to safeguard the interest of the members who can’t look after their interests.
• An Independent director is a non-executive director of a company who helps the company in improving corporate credibility and governance standards. He does not have any kind of relationship with the company that may affect the independence of his/ her judgment.

3. Due diligence exercise before joining as an independent director

In one’s professional career, getting on board as a director is an important opportunity for growth as this position gives immense exposure to various dimensions of business, industry, people, networking, technology, etc. Directorships enhance leadership skills as it is all about collaborative decision-making in the best interest of all the stakeholders. So, one should take up board directorship and contribute to good corporate governance. However, a thorough due diligence exercise as given below should be undertaken before joining the independent directorship of any company:

1. Understand the objective, vision, and mission of the company.
2. Obtain knowledge of business activities and the industry of the company.
3. The current composition of the board of directors and management and key persons and their respective profiles.
4. Reason for the vacancy of the position of previous independent director.
5. Statutory auditors and audit reports and notes on qualification, if any.
6. Pending cases, if any.
7. Related party transactions.
8. Media presence.
9. Connect with other independent directors to gain more knowledge about culture, etc.
10. Verify Directors’ and Officers’ Insurance provided by the company.

4.   Manner of appointment of independent director

Appointment of independent director shall be made as per Section 149 of the Companies Act, 2013 read with rule Rule 5 of Companies (Appointment and Qualification of Directors) Rules, 2014 and regulation 16 of Securities Exchange Board of India (Listing and Obligations Disclosure) Regulations 2015.

The person with the desired skill set and qualifying all criteria must have his/her name added in the data bank of an independent director. Database of Independent Directors is maintained at https://www.independentdirectorsdatabank.in/ 

The company may select qualified persons to be appointed as independent directors from data banks based on their areas of expertise and expertise. Once the right person is found, The Company shall follow the following procedure:

1. Whether the selected person is qualified in terms of Section 149(6) of the Companies Act read with Rules 5 and 6 of The Companies (Appointment and Qualification of Directors) Rules, 2014.
2. Obtain DIN Director Identification Number (DIN). The Company shall obtain a DIN if the selected person is not having it.
3. Obtain intimation that he is not disqualified to appoint as director in Form DIR-8.
4. Consent to act as a Director in Form-DIR-2
5. The Company shall hold a Board Meeting to approve the appointment of an Independent Director wherein the following matters shall be decided:
   • Resolution of appointment to hold office up to 5 years shall be passed subject to the approval of shareholders in the General Meeting.
   • Decide terms of appointment and remuneration
   • Decide the Directors' authorization for filing documents with respect to such an appointment
   • Decide upon the Date and agenda of the General Meeting
6. The Company shall convey the General Meeting to confirm the appointment of the Independent Director through ordinary Resolution
7. The Company shall issue the appointment letter to the Director
8. The Director shall disclose his interest in other entities in Form MBP-1 within 30 days of his appointment.
9. The Company shall file Form DIR-12 with RoC within 30 days of his appointment.

Listed companies, additionally have to disclose the appointment of an independent director to stock exchanges within 24 hours of the conclusion of the board meeting and post the appointment on the website within 2 working days.

5. Period of Appointment of Independent Director

• As per Section 149(10) of the Companies Act, an Independent Director shall hold the office for a period of 5 consecutive years.
• He shall be eligible for reappointment for another 5 consecutive years. However, for reappointment, the Company shall pass a Special Resolution.
• As per Section 149(11), no independent director shall hold the office for more than 2 consecutive terms. After 2 terms, he has to cease his appointment.
• However, he can again be reappointed after the expiry of 3 years of ceasing to become an independent director.
• Further, during such a period of 3 years, an independent director shall not be appointed in the company or associated with the company in any other capacity, either directly or indirectly.

6. Remuneration of Independent Director

• Independent Directors shall not be entitled to any stock option. 
• He may receive any remuneration by way of a sitting fee for attending board meetings or committee meetings. However, the sitting fee shall not exceed INR 1,00,000 per meeting.
• He shall also be entitled to receive reimbursement of expenses for participation in the Board and other meetings and profit-related commission as may be approved by the members.
• Further, in case of loss or inadequate profits, an independent director may receive remuneration.

7. Number of Independent Directors in Panel

7.1 Board Composition:

1. Listed company:
   • Minimum 1/3 of the total number of directors as an independent director
   • Where the chairperson is not a regular non-executive director, then at least half of the directors should be independent directors. And top 1000 listed companies must have 1 woman independent director.

2. Unlisted Public Company: Following unlisted public company must have at least 2 independent directors on its board:
   • paid-up capital INR 10 crores or more or
   • turnover of INR 100 crores or more or
   • aggregate outstanding loans or borrowings, debentures, and deposits exceeding INR 50 crores.

7.2 Audit Committee and Nomination and Remuneration Committee

1. Listed Company:  As per the Act and listing regulations, listed companies must have a minimum of 3 directors as members of the audit committee and at least 2/3 of members of the audit committee should be independent directors.

2. Unlisted Public Company: An unlisted public company having:
   • paid-up capital of INR 10 crores  or more; or
   • turnover of INR 100 crores or more; or
   • aggregate, outstanding loans or borrowings or debentures or deposits exceeding INR 50 crore or more, 

must have at least 3 directors, out of which at least 50% should be independent directors.

7.3 Corporate Social Responsibility (CSR) Committee

The following companies are required to form a CSR Committee consisting of 3 or more directors:

• Company having a net worth of 500 crores or more, or 
• Turnover of INR 1000 crores or more or 
• A net profit of INR 5 crores or more during the immediately preceding financial year shall 

out of which at least one director shall be an independent director

7.4 Stakeholders relationship committee

As per listing regulations, the listed company must have at least 3 directors as members of the stakeholder relationship committee out of which one should be an independent director

8. Code of conduct for an independent director

• Section 149(8) mentions that The Company and Independent Director, both, shall follow the code of conduct given in Schedule IV.
• The Code is a guide to professional conduct for independent Directors. Adherence to these standards will promote confidence of the investment community, particularly minority shareholders, regulators, and companies in the institution of independent Directors.
• The code specifies that an independent director should:
  • uphold ethical standards of integrity and probity.
  • act objectively and constructively while exercising his duties
  • exercise his responsibilities in a bona fide manner in the interest of the company.
  • devote sufficient time and attention to his professional obligations for informed and balanced decision-making.
  • prevent any extraneous considerations that vitiate his/her exercise of objective independent judgment in the paramount interest of the company as a whole, while concurring in or dissenting from the collective judgment of the Board in its decision-making.
  • not abuse his position for the purpose of gaining a direct or indirect personal advantage or advantage for any associated person and is detrimental to the company or its shareholders.
  • refrain from any action that would lead to the loss of his independence.
  • Immediately inform the board of directors about circumstances making him/her lose his/her independence.
  • assist the company in implementing the best corporate governance practices.

9.  Role and functions of independent director

An independent director will:

1. すべてのステークホルダー、特に少数株主の利益を保護し、ステークホルダー間の相反する利益のバランスを調整する。
2. 合意された目標や目的の達成に向けた経営陣のパフォーマンスを精査し、業績報告を監視する。
3. 財務情報の整合性を確認し、財務管理およびリスク管理システムが堅牢かつ正当性を証明できるものであることを保証する。
4. 取締役会の審議において、特に戦略、業績、リスク管理、リソース、主要な人事、行動基準といった課題に対し、独立した立場から判断を下す。
5. 取締役会および経営陣のパフォーマンス評価において、客観的な視点を提供する。
6. 業務執行取締役、主要な経営幹部、および上級管理職の適切な報酬水準を決定し、これらの役職者の任命や、必要に応じた解任の勧告において主導的な役割を果たす。
7. 経営陣と株主の利益が対立する状況において、会社全体の利益のために調整および仲裁を行う。
8. 監査委員会のメンバーとして、関連当事者取引の適正価格での承認を検討し、公募で調達した資金の使途を監視し、会社の業務や行為について調査を行う。

10.   Duties of independent directors

An independent director shall—

1. 取締役会、所属する取締役会委員会、および株主総会に可能な限り出席する。
2. 適切な導入研修を受け、会社のスキル、知識、状況に関する理解を定期的に更新・刷新する。
3. 情報の適切な説明や補足を求め、必要に応じて会社の費用負担で外部専門家による適切な助言や意見を求め、それに従う。
4. 必要に応じて建設的な意見や批判を提供し、取締役会の意思決定プロセスに付加価値を与える。
5. 重要な事項について合理的かつバランスの取れた決定を下せるよう、十分かつ正確な情報の収集に努める。
6. 自身が委員長またはメンバーを務める取締役会委員会において、建設的かつ積極的に参加する。
7. 会社の運営や提案された行動に懸念がある場合、取締役会でそれらが対処されるようにし、解決されない場合は、その懸念を取締役会議事録に記録するよう求める。
8. 会社および会社を取り巻く外部環境について常に十分な情報を把握しておく。
9. 適切に機能している取締役会や委員会の運営を不当に妨げない。
10. 関連当事者取引を承認する前に十分な注意を払い、十分な審議が行われるようにし、それが会社の利益にかなうものであることを確認する。
11. 会社が適切かつ機能的な内部通報制度を備えていることを確認し、その制度を利用した者が不利益を被らないようにする。
12. 非倫理的な行為、不正の事実または疑い、あるいは会社の行動規範や倫理規定への違反について報告する。
13. 権限の範囲内で行動し、会社、株主、従業員の正当な利益の保護を支援する。
14. 取締役会の明示的な承認がある場合や法律で義務付けられている場合を除き、企業秘密、技術、広告・販売促進計画、未公開の価格に影響を与える情報など、機密情報を保持する。
15. 会社に対する自身の持分（信託分を含む）、および自身や関連当事者が関与する会社の株式、その他の資産、デリバティブ商品に関する個人的な取引を取締役会に開示する。
16. 経営陣から受け取った情報の正確性と信頼性を確保するために適切な調査を行い、情報を鵜呑みにしない。
17. 社内の透明性を高め、自発的な情報開示の範囲を拡大するよう努める。
18. 公開された郵送先住所およびメールアドレスを持つ。
19. 非社外取締役や経営陣の出席なしに、社外取締役のみによる会議を少なくとも年1回開催し、非社外取締役や議長のパフォーマンスを評価し、経営陣や取締役会からの情報提供の質と適時性を検証する。