Section 150 of CA 2013 : Section 150: Manner Of Selection Of Independent Directors And Maintenance Of Data Bank Of Independent Directors

Explanation using Example

Imagine a scenario where XYZ Pvt. Ltd. is looking to appoint a new independent director to its board. According to Section 150 of The Companies Act, 2013, XYZ Pvt. Ltd. can select a candidate from a data bank that lists individuals eligible and willing to act as independent directors. This data bank is maintained by a recognized body and is available on their website.

Before appointing someone from the data bank, XYZ Pvt. Ltd. must perform due diligence to ensure the candidate meets all the necessary criteria and is a suitable fit for the company. Once they have selected a candidate, the appointment must be approved by the shareholders at the general meeting.

To inform the shareholders, the notice for the general meeting will include an explanatory statement that justifies why the selected individual is being appointed as an independent director.

The data bank itself operates under rules prescribed by the Central Government, ensuring that all listed individuals are willing and qualified to serve as independent directors as per the requirements laid out in Section 149.