CS Professional · Compliance Management, Audit and Due Diligence · Due Diligence
Meridian Pharma Ltd wants to appoint Mr. Rao as an independent director selected from the notified data bank. His name appears in the data bank, so the Chairman says no further checks are needed. As per the Companies Act, 2013, who bears the responsibility of exercising due diligence before selecting a person from the data bank?
The company making the appointment bears the responsibility. Under section 150(1) proviso, the company must exercise due diligence before selecting an independent director from the data bank; inclusion in the data bank does not remove that duty or move it to the maintaining body.
- AThe body maintaining the data bank
- BThe company making the appointmentCorrect
- CThe Central Government
- DThe person being selected
Explanation
Section 150(1) proviso states that responsibility of exercising due diligence before selecting a person from the data bank lies with the company making the appointment. Listing in the data bank does not shift this duty to the data bank maintainer, so the Chairman's view is wrong.
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