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Relaxing norms, the government today said an independent director's previous tenure would not be counted towards the ten-year period limit, as mandated under the new companies law, provided that the individual is appointed afresh before March 2015.
Under the Act, an independent director can have a maximum of two tenures of five consecutive years (a total of ten years), with a cooling off period of three years.
Many stakeholders have been seeking clarity on various aspects of the Companies Act, 2013, including aspects related to appointment and qualification of independent directors.
"It has also been clarified that if a company intends to continue an existing independent director, his appointment would need to be made expressly afresh under the Act before March 31, 2015, and his earlier tenure will not be counted for such fresh appointment under the Act," the Corporate Affairs Ministry said.
The Ministry is implementing the Companies Act.
In a circular today, the Ministry also clarified that "in case of an independent director, "pecuniary relationship does not include receipt of remuneration, as independent director, from the holding, subsidiary or associate company".
