Skip to content

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

Zenith Agro Ltd proposes to appoint Mr. Bose as an independent director, selected from the data bank. The board asks the company secretary what must accompany the notice of the general meeting called to approve the appointment. What does the Companies Act, 2013 require?

The notice must carry an explanatory statement indicating the justification for choosing the appointee as independent director. Section 150(2) requires the appointment to be approved by the company in general meeting, with that justification annexed. No auditor report, Government consent or data bank guarantee is called for.

  1. AAn explanatory statement indicating the justification for choosing the appointee as independent directorCorrect
  2. BA certificate from the data bank maintainer guaranteeing eligibility
  3. CA report of the auditor on the appointee's qualifications
  4. DThe consent of the Central Government to the appointment

Explanation

Section 150(2) provides that the appointment of an independent director is approved by the company in general meeting, and the explanatory statement annexed to the notice must indicate the justification for choosing the appointee. No auditor report, Government consent or data bank guarantee is required by that provision.

Did you get it right without looking?

One question tells you little. A timed set on Due Diligence shows your real accuracy, how long you take and where you lose marks.

Practise Due DiligenceFree diagnostic mock

More Due Diligence questions