Clarifications on Rules prescribed under the Companies Act, 2013 Matters relating to appointment and qualifications of directors and Independent Directors reg.

Independent director pecuniary relationship clarified: arm's length transactions and specified remuneration do not disqualify appointment.

An independent director is not treated as having a pecuniary relationship where transactions are in the ordinary course of business at arm's length; receipt of fees under section 197(5), reimbursement of expenses, and member approved profit commission are excluded. Existing IDs must be expressly reappointed under sections 149(10)/(11) read with Schedule IV within one year of 1 April 2014 if so intended. Terms under section 149(10) may be for less than five years but count as one term; no more than two consecutive terms are permitted and a three year cooling off applies. Appointment must be formalized by a letter under Schedule IV.