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Regarding appointment of Independent Director under section 149 (4) of Co. Act 2013 read with Rules 4 of The Companies (Appointment & Qualification of Directors) Rules, 2014 provides that the following class or classes of companies shall have latest two Directors as independent Directors on the Board of Directors of the Company (iii) a public company which have, in aggregate of, outstanding Loans, debentures and deposits, exceeding fifty crores rupees In this regard please clarify the following : 01. What is meaning of “Outstanding loans” i.e. both short term and long term loans both or Else ? 02. For the purpose of this rules it is stated that, the paid up share capital or turnover or outstanding loans, debentures and deposits, as the case may be as existing on the last date of latest audited financial statements shall be taken into account then : Please clarify which date i. e. date of balance-sheet as on 31st March or date of signing of Balance-sheet of that year ?

Independent Director

Posted By: Vasant patel 9 year(s) ago

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The terminology used in Rule 4 is "outstanding loans". It has to be interpreted to mean both long and short term borrowings, i.e. the term loans as well as OD/CC/Bills limit outstandings etc. and only thing that could be excluded is L/C limits as these are non fund based and non crystallised liabilities. The position has to be reckoned with respect to the date on which the accounts are approved by the board before adoption in Annual General Meeting and if any of the threshold limits have been crossed on the date of the adoption of accounts, the independent directors are required to be adopted. Unless the balance sheet is signed, there is no finality. Hence only on signing the balance sheet, position should be reckoned.

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