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CS Professional · Compliance Management, Audit and Due Diligence · Due Diligence

Verma Pharma Ltd proposes to appoint Ms. Nisha Rao as an independent director, selected from the data bank. The general meeting notice is being drafted. Under section 150(2), what must the explanatory statement annexed to the notice contain regarding her appointment?

The explanatory statement must indicate the justification for choosing the appointee as independent director. Section 150(2) requires the general meeting to approve the appointment, and the notice must explain why this person was chosen, rather than attaching reports or government certificates.

  1. AA copy of the due diligence report of the data bank operator
  2. BThe justification for choosing the appointee as independent directorCorrect
  3. CThe remuneration paid to her by other companies
  4. DA certificate from the Central Government on her eligibility

Explanation

Section 150(2) requires approval of the appointment in general meeting and says the explanatory statement must indicate the justification for choosing the appointee. The other items are not required by that sub-section.

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