Letter Of Appointment Of Independent Director Page 7
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12IV. Manner of appointment:
(1) Appointment process of independent directors shall be independent of the company
management; while selecting independent directors the Board shall ensure that there is
appropriate balance of skills, experience and knowledge in the Board so as to enable the
Board to discharge its functions and duties effectively.
(2) The appointment of independent director(s) of the company shall be approved at the
meeting of the shareholders.
(3) The explanatory statement attached to the notice of the meeting for approving the
appointment of independent director shall include a statement that in the opinion of the
Board, the independent director proposed to be appointed fulfils the conditions specified
in the Act and the rules made thereunder and that the proposed director is independent of
the management.
(4)The appointment of independent directors shall be formalized through a letter of
appointment, which shall set out :
a) the term of appointment;
b) the expectation of the Board from the appointed director; the Board-level committee(s)
in which the director is expected to serve and its tasks;
c) the fiduciary duties that come with such an appointment along with accompanying
liabilities;
d) provision for Directors and Officers (D and O) insurance, if any;
e) the Code of Business Ethics that the company expects its directors and employees to
follow;
f) the list of actions that a director should not do while functioning as such in the
company; and
g) the remuneration, mentioning periodic fees, reimbursement of expenses for
participation in the Boards and other meetings and profit related commission, if any.
(5) The terms and conditions of appointment of independent directors shall be open for
inspection at the registered office of the company by any member during normal business
hours.
(6) The terms and conditions of appointment of independent directors shall also be posted on
the company’s website.
V. Re-appointment:
The re-appointment of independent director shall be on the basis of report of performance
evaluation.
VI. Resignation or removal:
(1) The resignation or removal of an independent director shall be in the same manner as is
provided in sections 168 and 169 of the Act.
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