An independent boss (also known as an outside director) is a director of a board of directors who has no material or financial relationship with the company or persons related to, except the cost of sitting. In the US, independent outsiders make up 66% of all councils and 72% of corporate boards S & amp; P 500, according to The Wall Street Journal.
Video Independent director
Legal requirements
United States
The NYSE and NASDAQ share exchange standards for independent directors are similar. Both require that "the majority of the boards of directors of registered companies become 'independent,'" both allow compensation for directors of $ 120,000/year or less (as of August 2008).)
NYSE menyatakan:
"no director shall qualify as 'independent' unless the board of directors affirms that the director 'has no material relationship' with the registered company, either directly or as a partner, shareholder or official of an organization with a relationship with the company."
The Nasdaq Rules say that an independent director should not be an officer or employee of the company or its subsidiary or any other person having a relationship which, in the opinion of the board of directors of the company, would interfere with the conduct of an independent appraisal in carrying out the responsibilities of a director.
According to the Conference Board, "in addition to delisting the company... absolutely no punishment" by the stock exchange or the SEC because it does not have enough independent directors.
India
In India by 2017, the majority of at least two directors of public companies have a share capital exceeding Rs. 100 million (Rs 100,000,000) must be independent. Clause 49 of the listing agreement mentions the independent director as follows:
"For the purposes of this clause, 'independent director' means a director who is separate from receiving remuneration of directors, has no relationship or other material financial transaction with the company, its promoters, its management or its subsidiaries, which in the Board's judgment may affect the independence of the director's assessment."
The Companies Act, 2013, for the most part has been implemented from 1 April 2014, has mandated all listed public companies to have at least one-third of the total Directors to become independent. Whereas in the case of an unlisted public company, the following enterprise classes must have at least two directors as independent directors:
(i) a Public Company that has paid share capital of Ten Crore rupees or more; or (ii) a Public Company with a Turnover of One Hundred Rupees or more; or (iii) a Public Company which, in aggregate, owns loans, bonds and deposits exceeding 50 Crore rupees or more.
The Corporate Law, 2013 is designed taking into account the important inputs and contributions an Independent Director can make to the business. Article 149 (6) of the law establishes criteria for a candidate who ensures the highest standards of integrity, while also preventing conflicts of interest. Such provisions seek to ensure designated autonomy to facilitate the effective execution of duties such as upholding the interests of shareholders, upholding corporate governance standards, among others. The compensation offered to the Independent Director in the form of "seating fee" has also been increased from Rs. 20,000 (determined by Companies Act, 1956) to a maximum of Rs. 1,00,000/- per meeting.
The requirements in Kenya are similar to those in India. (These can be found in Companies Act, Cap 486 Laws of Kenya). & Lt; George Kinyua, LL.B & gt;
Maps Independent director
Effectiveness
Some researchers have complained that the company has appointed "independent directors who are too sympathetic to management, while still technically independent in accordance with the definition of the rules."
One complaint against the rules of independence is that the CEO can find a gap to influence the board of directors. While the NYSE has a $ 1 million limit on business affairs between directors and companies, this does not include charitable contributions. Two critics of management's influence over the board noted that "a director who is an officer or employee of a charitable organization can still be considered independent even if the company's directors donate more than $ 1 million to the organization."
See also
- Non-executive director
References
- The Role of Independent Director After Sarbanes-Oxley , By Bruce F. Dravis
Source of the article : Wikipedia
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