Mumbai: SEBI approved the introduction of a new option for appointment and removal of independent directors from the boards of companies on Friday. The move will provide flexibility in the approval process for appointment or removal of independent directors. Once the amended rules are in place, the appointment and removal of independent directors could be done by way of two parameters — threshold for ordinary resolution and threshold for majority of minority shareholders.
Currently, the appointment, re-appointment or removal of independent directors is to be made through a special resolution.
SEBI's board, during its meeting held here on Friday, approved an alternative method for the appointment and removal of independent directors appointed for the first term.
Under the alternate mechanism, if the special resolution for appointment of an independent director does not get the requisite majority, then two other thresholds — for ordinary resolution and for majority of minority shareholders — would be tested.
"If the resolution crosses the above two thresholds, in the same voting process, then such a resolution for appointment of the independent director would be deemed to be approved by shareholders.
"The same threshold will also be applicable for removal of an independent director appointed under this alternate mechanism," the release said.
For a special resolution to be passed, the number of votes in favour should be at least three times those against the resolution.
(With PTI inputs)
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