Skip to content

CS Executive · Setting Up of Business, Industrial and Labour Laws · Selection of Business Organization

Kaveri Engineering Ltd has shortlisted Mr. Rao from the data bank as an independent director. Under the Companies Act, 2013, how must his appointment be approved, and what must the explanatory statement to the general meeting notice contain?

The appointment must be approved by the company in general meeting, and the explanatory statement annexed to the notice must indicate the justification for choosing the appointee as independent director. Board approval alone does not suffice under the Act.

  1. AApproval by the Board alone; the statement must give his past remuneration
  2. BApproval by the company in general meeting; the statement must indicate the justification for choosing himCorrect
  3. CApproval by the Registrar of Companies; the statement must list the data bank's fees
  4. DApproval by the Central Government; the statement must list all other candidates in the data bank

Explanation

Section 150(2) requires the appointment of an independent director to be approved by the company in general meeting, and the explanatory statement annexed to the notice must indicate the justification for choosing the appointee. Board approval alone is insufficient.

Did you get it right without looking?

One question tells you little. A timed set on Selection of Business Organization shows your real accuracy, how long you take and where you lose marks.

Practise Selection of Business OrganizationFree diagnostic mock

More Selection of Business Organization questions