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CS Executive · Company Law and Practice · Board Composition and Powers of the Board

Narmada Infra Ltd is an unlisted public company with 9 directors. Its paid-up share capital is Rs 12 crore, its turnover is Rs 60 crore and its outstanding loans are Rs 20 crore. How many independent directors must it appoint at minimum?

Two independent directors are required. Paid-up capital of Rs 12 crore crosses the Rs 10 crore threshold for unlisted public companies, which triggers a minimum of two independent directors. The one-third requirement applies only to listed companies.

  1. ANone, because it is unlisted
  2. BTwoCorrect
  3. CThree, being one-third of the board
  4. DOne

Explanation

An unlisted public company must have at least two independent directors if its paid-up capital is Rs 10 crore or more, its turnover is Rs 100 crore or more, or its loans, debentures and deposits exceed Rs 50 crore. Paid-up capital of Rs 12 crore meets the first test. The one-third rule applies to listed companies, so 3 is wrong.

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