Companies Act 2013 | CA B K Goyal & Co LLP

MINISTRY OF CORPORATE AFFAIRSNOTIFICATIONNew Delhi, the 21st February, 2018 S.O. 768(E).- Whereas, sub-section (2) of Section 152 of the Companies Act, 2013 (18 of 2013) (hereinafterreferred to as the said Act) provides that every director (including an independent director) shall be appointed by thecompany in general meeting;And whereas, sub-section (10) of Section 149 of the said Act provides that subject to the provisions of section152, an independent director shall hold office for a term up to five consecutive years on the Board of a company, butshall be eligible for re-appointment on passing of a special resolution by the company and disclosure of such appointmentin the Board’s report;And whereas, sub-section (1) of Section 169 of the said Act provides that a company may, by ordinaryresolution, remove a director, not being a director appointed by the Tribunal under section 242, before the expiry of theperiod of his office after giving him a reasonable opportunity of being heard;And whereas, the following difficulties have arisen in giving effect to the above provisions of the said Act regardingappointment and removal of independent directors from the boards of companies, namely :-(i) various stakeholders have suggested difficulties regarding proper monitoring and implementation of corporategovernance requirements in companies and in order to strengthen corporate governance process, such stakeholders havesuggested for reviewing section 169 of the said Act, which, inter-alia, deals with the removal of independent directors;(ii) in view of the fact that presently an independent director is re-appointed for 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 anordinary resolution and not by a special resolution;¹Hkkx IIµ[k.M 3(ii)º Hkkjr dk jkti=k % vlk/kj.k 3And whereas, in order to remove above said difficulty, and to ensure better corporate governance in companies, andbalancing of powers of the board of the company, it is felt that there is a need for an amendment in section 169 of theCompanies Act, 2013 to provide for removal of such re-appointed independent director by way of a special resolution;Now, therefore, in exercise of the powers conferred by sub-section (1) of Section 470 of the Companies Act,2013 (18 of 2013), the Central Government hereby makes the following Order to remove the aforesaid difficulty,namely:-1. Short title and commencement.- (1) This Order may be called the Companies (Removal of Difficulties) Order,2018.(2) It shall come into force from the date of its publication in the Official Gazette.2. In the Companies Act, 2013, in section 169, in sub-section (1), −(i) before the proviso, the following proviso shall be inserted, namely :-“Provided that an independent director re-appointed for second term under sub-section (10) of section 149 shall beremoved by the company only by passing a special resolution and after giving him a reasonable opportunity of beingheard:”;(ii) in the existing proviso, for the words “Provided that”, the words “Provided further that” shall be substituted. [F. No. 7/8/2016-CL.I]K.V.R. MURTY, Jt. Secy. 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