Section 149 – Board of Directors: Composition and Role

 

Section 149 – Board of Directors: Composition and Role

Key Points:

• Composition: Every company must have a Board of Directors, with a minimum of 3 directors for public companies, and 2 directors for private companies.

• Independent Directors: For public listed companies and certain other classes of companies, at least one-third of the Board should comprise independent directors, as per Section 149.

Compliance Steps:

• Appointment: Ensure directors are appointed in accordance with the articles of association and company law.

• Independent Directors: For listed companies, confirm that independent directors meet the criteria set forth under Section 149(6), including having no relationship with the company.

• Rotation of Directors: Ensure compliance with Section 152, which mandates the rotation of directors in annual general meetings (AGMs) to maintain a dynamic leadership team.

Example:

• Reliance Industries: Reliance follows best practices in corporate governance by maintaining a robust board with a significant number of independent directors, ensuring transparency and reducing risks associated with conflicts of interest.