Sample Board Resolution for Appointment of Independent Director
Overview : Under Section 149 of the Companies Act, 2013, the appointment of independent directors is mandatory for certain categories of companies. Listed public companies must have at least one-third independent directors, while specified public companies with paid-up capital of ₹10 crores or more, turnover of ₹100 crores or more, or outstanding loans exceeding ₹50 crores must appoint at least two independent directors. This board resolution formally records the appointment decision and ensures compliance with statutory requirements before seeking shareholders' approval.
CERTIFIED TRUE COPY OF THE RESOLUTION PASSED AT THE MEETING OF THE BOARD OF DIRECTORS OF ____________ [Company Name] HELD ON ____________ [Date] AT ____________ [Time] AT ____________ [Meeting Venue]
"RESOLVED THAT pursuant to the provisions of Section 149, 150, 152, and 161 of the Companies Act, 2013 read with Schedule IV to the Act and Rules 4 and 5 of the Companies (Appointment and Qualification of Directors) Rules, 2014, and other applicable provisions (including any statutory modification or re-enactment thereof for the time being in force), consent of the Board be and is hereby accorded to appoint Mr./Ms. ____________ [Director Name], holding DIN: ____________ [Director Identification Number], as an Additional Director (Non-Executive and Independent) on the Board of the Company with effect from ____________ [Date] to hold office until the conclusion of the immediate next Annual General Meeting.
RESOLVED FURTHER THAT the Board, after considering the profile, qualifications, experience, and expertise of Mr./Ms. ____________ [Director Name], is satisfied that the proposed appointee fulfils all the conditions specified in Section 149(6) of the Companies Act, 2013, for appointment as an Independent Director and is independent of the management of the Company. The Board further confirms that Mr./Ms. ____________ [Director Name] possesses appropriate skills, experience, and knowledge in the fields of ____________ [relevant expertise areas], which will be beneficial for the Company's business operations and governance.
RESOLVED FURTHER THAT subject to the approval of the members in the ensuing Annual General Meeting, Mr./Ms. ____________ [Director Name] be appointed as an Independent Director of the Company for a term of ____________ [term period up to 5 years] consecutive years from the date of the Annual General Meeting, and such appointment shall not be subject to retirement by rotation in accordance with Section 149(13) of the Companies Act, 2013.
RESOLVED FURTHER THAT the said appointment be subject to the proposed appointee providing a declaration at the first Board Meeting attended by him/her that he/she satisfies the criteria of independence as specified under Section 149(6) of the Companies Act, 2013, and the Company shall obtain such declaration in accordance with Section 149(7) of the Act.
RESOLVED FURTHER THAT the terms and conditions of appointment including remuneration, if any, payable to the Independent Director shall be as approved by the Board from time to time and shall be in accordance with the provisions of the Companies Act, 2013 and rules made thereunder, and a formal letter of appointment shall be issued to the appointee setting out the terms and conditions as prescribed under Schedule IV of the Companies Act, 2013.
RESOLVED FURTHER THAT the appointment shall be placed before the members at the immediate next Annual General Meeting for their approval by way of an ordinary resolution, and the Board shall include appropriate disclosures in the explanatory statement attached to the notice of such meeting stating that in the opinion of the Board, the Independent Director proposed to be appointed fulfils the conditions specified in the Act and is independent of the management.
RESOLVED FURTHER THAT ____________ [Authorised Signatory Name], ____________ [Designation] of the Company, be and is hereby authorised to file the requisite forms with the Registrar of Companies, including Form DIR-12, within the prescribed time limit and to issue certified copies of this resolution as and when required.
RESOLVED FURTHER THAT any Director or Key Managerial Personnel of the Company be and is hereby severally authorised to do all such acts, deeds, matters, and things as may be necessary, expedient, proper, or desirable to give effect to this resolution including but not limited to preparing and issuing the letter of appointment, convening the Annual General Meeting, and completing all regulatory filings and compliances.
Relevant Legal Provision
Section 149 of the Companies Act, 2013 mandates the appointment of independent directors for specific categories of companies. Sub-section (4) requires every listed public company to have at least one-third of the total number of directors as independent directors. Rule 4 of the Companies (Appointment and Qualification of Directors) Rules, 2014 extends this requirement to public companies with paid-up share capital of ₹10 crores or more, turnover of ₹100 crores or more, or outstanding loans, debentures, and deposits exceeding ₹50 crores, requiring at least two independent directors.
Section 149(6) of the Companies Act, 2013 defines the criteria for independence, ensuring that independent directors maintain arm's length relationships with the company and its management. The section specifies that an independent director must not be a promoter, managing director, or have any material pecuniary relationship with the company. Section 149(10) provides for a maximum tenure of five consecutive years, with re-appointment possible only through a special resolution, whilst Section 149(11) limits independent directors to two consecutive terms with a mandatory three-year cooling-off period thereafter.
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FAQ's
Listed public companies must have at least one-third independent directors. Public companies with paid-up capital of ₹10 crores or more, turnover of ₹100 crores or more, or outstanding loans exceeding ₹50 crores must appoint at least two independent directors.
An independent director can hold office for up to five consecutive years and is eligible for re-appointment for another term of five years through a special resolution. However, no independent director can hold office for more than two consecutive terms.
Yes, the appointment of independent directors must be approved by shareholders at a general meeting. The board can initially appoint an additional director, but shareholder approval is required for regularisation.
An independent director must possess appropriate skills, experience, and knowledge in finance, law, management, or other relevant fields. They must also satisfy the independence criteria specified in Section 149(6) of the Companies Act, 2013.
Independent directors are not entitled to stock options but can receive sitting fees, reimbursement of expenses, and profit-related commission as approved by shareholders. If the company has inadequate profits, remuneration can be paid as per Schedule V.
Form DIR-12 must be filed with the Registrar of Companies within 30 days of appointment. Additionally, a certified copy of the board resolution may need to be filed under Section 117 if required.
Any intermittent vacancy of an independent director must be filled by the Board at the earliest but not later than the immediate next Board meeting or three months from the date of vacancy, whichever is later.
Yes, but there are limits. An independent director cannot hold more than seven directorships in listed companies or more than ten directorships in all companies combined, as per the provisions of the Companies Act, 2013.
After completing two consecutive terms, an independent director must observe a cooling-off period of three years before becoming eligible for reappointment. During this period, they cannot be associated with the company in any capacity.
At the first Board meeting attended, the independent director must provide a declaration confirming that he/she satisfies the criteria of independence as specified under Section 149(6) of the Companies Act, 2013.
Author Bio
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Setindiabiz Editorial Team is a multidisciplinary collective of Chartered Accountants, Company Secretaries, and Advocates offering authoritative insights on India’s regulatory and business landscape. With decades of experience in compliance, taxation, and advisory, they empower entrepreneurs and enterprises to make informed decisions.