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CS Professional · Environmental, Social and Governance (ESG) - Principles and Practice · Conceptual Framework of Corporate Governance

Kaveri Pharma Ltd, a listed company, appoints Mr. Rao as its Chairperson. He is a non-executive director and is a relative of the promoter. Applying the SEBI LODR rule on board composition, what proportion of the board must be independent directors?

At least one-half of the board must be independent. Although the Chairperson is non-executive, being a relative of the promoter triggers the stricter requirement. The one-third norm is available only where a non-executive Chairperson has no such relationship with the promoter or management.

  1. AOne-third of the board
  2. BOne-half of the boardCorrect
  3. CTwo-fifths of the board
  4. DAt least two independent directors only

Explanation

When the Chairperson is non-executive but is related to a promoter or persons occupying management positions at board or one level below the board, at least one-half of the board must be independent. The one-third norm applies only where the Chairperson is non-executive and not so related. So one-third is wrong here.

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