IICA Independent Director flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Databank registration validity

Registration in the Independent Directors Databank remains valid for one year from the date of registration or renewal; renewal must be applied for before expiry to keep the director eligible.

Proficiency self-assessment deadline

A person included in the databank must clear the online proficiency self-assessment within two years from the date of inclusion, unless exempt under the applicable rules.

Self-assessment exemption

Persons who have served as a director or key managerial personnel for at least three years in a listed company or specified entities are exempt from the online proficiency self-assessment.

Failure to renew

If a registered person does not apply for renewal within the prescribed time, the name is removed from the databank and the person ceases to be eligible for independent director appointment.

IICA databank maintenance

The Indian Institute of Corporate Affairs maintains the Independent Directors Databank with support from the Ministry of Corporate Affairs; registration is a prerequisite for appointment.

Databank data update

Directors must keep their databank profile current, including DIN, qualifications, experience and self-assessment status, to avoid eligibility issues during appointment or renewal.

Board meeting frequency

Under SEBI LODR Regulation 17, the board of a listed entity must meet at least four times a year, with a maximum gap of one hundred and twenty days between consecutive meetings.

Independent director proportion

Where the chairperson is non-executive, at least one-third of the board must be independent directors; where the chairperson is executive, at least half must be independent.

Audit committee composition

The audit committee must have at least three directors, with at least two-thirds being independent directors, and its chairperson must be an independent director.

Nomination committee composition

The nomination and remuneration committee must have at least three members, all non-executive directors, with at least two-thirds being independent directors.

Independent woman director

Every listed entity must have at least one independent woman director on its board, as required under SEBI LODR Regulation 17(1)(a) read with the Companies Act, 2013.

Board evaluation requirement

Section 178 and LODR Regulation 17(3) require annual evaluation of the performance of the board, its committees and individual directors, including independent directors.

Independent director criteria

Section 149(6) requires an independent director to have no material pecuniary relationship with the company, its promoters, directors, or holding, subsidiary or associate companies.

Remuneration restrictions

Under Section 149(9), an independent director may receive only sitting fees, reimbursement of expenses and profit-related commission approved by members; stock options are prohibited.

Tenure of independent director

Section 149(10) allows a term of up to five consecutive years, with reappointment possible on passing a special resolution by the company.

Cooling-off period

Section 149(11) limits an independent director to two consecutive terms and requires a three-year cooling-off period before re-appointment.

Liability of independent director

Section 149(12) limits liability to acts of omission or commission occurring with the director's knowledge, attributable through board processes, and with consent or connivance.

Listed company independent directors

Section 149(4) requires every listed public company to have at least one-third of its total number of directors as independent directors.

SEBI LODR scope

The SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 govern disclosure, board composition and governance norms for listed entities in India.

Insider trading regulation

The SEBI (Prohibition of Insider Trading) Regulations, 2015 prohibit trading on unpublished price-sensitive information and mandate codes of conduct and disclosures.

Insolvency and Bankruptcy Code

The IBC, 2016 established the Insolvency and Bankruptcy Board of India and provides a time-bound framework for resolution of stressed assets and liquidation.

Competition Commission of India

The CCI, constituted under the Competition Act, 2002, regulates anti-competitive agreements, abuse of dominance and combinations to protect market competition.

FEMA framework

The Foreign Exchange Management Act, 1999 governs cross-border transactions and foreign investment; the RBI issues regulations under it for non-debt and debt instruments.

GST introduction

The Goods and Services Tax, introduced in 2017, replaced multiple indirect taxes and is administered under the CGST Act, 2017 and related state legislation.

BRSR applicability

The Business Responsibility and Sustainability Report is mandatory for the top 1,000 listed entities by market capitalisation under LODR Regulation 34(2)(f).

NGRBC guidelines

The National Guidelines on Responsible Business Conduct, 2019 issued by MCA provide a framework covering ethics, human rights, environment and transparency for businesses.

CSR applicability thresholds

Section 135(1) applies to companies with net worth of INR 500 crore or more, turnover of INR 1,000 crore or more, or net profit of INR 5 crore or more.

CSR Committee composition

A company meeting the Section 135 threshold must constitute a CSR Committee of the Board with at least one independent director to recommend policy and expenditure.

CSR expenditure obligation

Section 135(5) requires spending at least 2% of average net profits of the three immediately preceding financial years, computed as per Section 198.

Unspent CSR treatment

If CSR obligation is not spent, the board must report reasons and transfer the unspent amount to a specified fund within six months of financial year end, or within thirty days for ongoing projects.

Excluded CSR activities

CSR expenditure excludes activities in the normal course of business, contributions to political parties, and activities benefiting only the company's employees.

Permitted CSR areas

The CSR Rules, 2014 permit activities such as education, healthcare, sanitation, environmental sustainability and protection of national heritage, subject to Schedule VII.