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Importance and Applicability of Independent Directors

Appointment of Independent Director is a key element of corporate governance, ensuring transparency, accountability, and unbiased decision-making within an organization. Independent directors bring an external perspective, oversee management performance, and protect the interests of shareholders. The appointment process involves verifying eligibility, obtaining consent, securing board and shareholder approval, and filing with ROC. SKMC Global assists businesses in identifying qualified candidates, ensuring compliance with the Companies Act, and managing documentation seamlessly.

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Importance and Applicability of Independent Directors

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  1. IMPORTANCE AND APPLICABILITY OF INDEPENDENT DIRECTORS The appointment of an Independent Director involves identifying eligible candidates as per Companies Act, 2013, obtaining their consent and DIN, and verifying their inclusion in the Independent Directors’ Databank. The process concludes with board and shareholder approval, followed by filing the appointment with the Registrar of Companies. IMPORTANCE Independent directors ensure the board’s effectiveness and impartiality by overseeing corporate strategy, financial disclosure, internal control, and executive compensation. They bring an objective and external perspective to board deliberations, especially in evaluating management performance or handling conflicts of interest. As custodians of good governance, independent directors uphold accountability, protect minority shareholders’ interests, and strengthen investor confidence. Their appointment process is a critical step toward fostering ethical leadership, transparency, and regulatory compliance within the organization. APPLICABILITY As per Section 149(4) of the Companies Act, 2013, every listed public company must have at least one-third of its board composed of independent directors. The requirement also applies to unlisted public companies meeting any of these criteria: ₹10 crore or more paid-up equity capital, ₹100 crore or more turnover, or borrowings, debentures, and deposits exceeding ₹50 crore. This framework ensures that companies with significant public interest or financial exposure maintain independent oversight and transparent decision-making. Even companies not mandatorily covered are encouraged to appoint independent directors voluntarily to strengthen governance and build credibility. At SKMC Global assists businesses in achieving compliance, enhancing governance, and streamlining operations through expert regulatory and advisory solutions. +91 989-125-5499 info@skmcglobal.com www.skmcglobal.com

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