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

Sundaram Textiles Ltd, a listed company, has a non-executive Chairperson who is not related to the CEO. The board has 6 directors in total, of whom 3 are independent. Under the SEBI LODR requirement for a board with a non-executive Chairperson, what is the minimum number of independent directors required?

At least one-third of the board must be independent when the listed company has a non-executive Chairperson who is not a promoter or related to one. For a six-member board this is two directors, so Sundaram Textiles, with three, already satisfies the requirement.

  1. AOne-third of the board, i.e. 2 directorsCorrect
  2. BHalf of the board, i.e. 3 directors
  3. CTwo-thirds of the board, i.e. 4 directors
  4. DAt least 1 independent director only

Explanation

Where the Chairperson is non-executive, at least one-third of the board must be independent. One-third of 6 is 2, so the company has 3 and complies. Requiring half applies when the Chairperson is executive or is a promoter or related to promoters or senior management.

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