The Ministry of Corporate Affairs (MCA) today clarified that a re-appointed independent director can be removed by the Company by passing a special resolution.
Presently, as per section 169 of the Companies Act, an independent director is re-appointed for the second term under sub-section (10) of section 149 of the said Act, only by way of a special resolution, such independent director can be removed by an ordinary resolution and not by a special resolution.
Various stakeholders have approached the Ministry pointing out certain difficulties regarding proper monitoring and implementation of corporate governance requirements in companies.
In order to strengthen corporate governance process, they suggested for reviewing section 169 of the said Act, which, inter-alia, deals with the removal of independent directors.
An order issued by the Ministry today said that “an independent director re-appointed for the second term under sub-section (10) of section 149 shall be removed by the company only by passing a special resolution and after giving him a reasonable opportunity of being heard.”
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