Most companies now need to have at least one woman and two independent directors, while the listed entities will be required to have a director to represent the interests of small shareholders if they demand.
The new requirements are part of the rules related to the appointment and qualification of directors under the Companies Act, 2013. Applicable to certain class of companies, the norms will be operational from April 1.
Under the rules notified by the Corporate Affairs Ministry, every listed company and those public firms having paid up share capital of Rs 100 crore or more should have at least one woman director on their board.
It will be also applicable to entities with a minimum turnover of Rs 300 crore.
"...any intermittent vacancy of a woman director shall be filled up by the board at the earliest but not later than immediate next board meeting or three months from the date of such vacancy whichever is later," the ministry has said.
Besides, certain class of corporates are required to have at least two independent directors on their respective boards. The rule would apply to public companies having minimum paid up share capital of Rs 10 crore and those where their aggregate "outstanding loans, debentures and deposits" exceed Rs 50 crore, according to the notification dated March 27.
With regard to independent directors also, the vacancies should be filled up at the earliest -- not later than the next board meeting or three months from the date of the post falling vacant.
For the purpose of complying with the rules, the paid up share capital and turnover, among others, as recorded in the latest audited financial statements should be taken into consideration by the companies.
To make it easier for corporates to choose the independent directors, a government authorised agency will maintain a database of "persons willing and eligible to be appointed as independent director".
The data base, to be placed on the Corporate Affairs Ministry's website, will have details about potential candidates such as their qualifications, experience and whether they face any legal proceedings.
Information about their tenure in listed companies and nature of directorship will also be made available. The ministry has mentioned that a company must carry out due diligence before deciding to choose a person.
That apart, a listed company will be required to have a small shareholders' director. The rule will kick in if at least 1,000 or one-tenth of the total number of small shareholders move a notice for appointing such a director. The companies can, however, have such a director suo motu.
The tenure of a small shareholders' director will be for a maximum of three years and will not be eligible for re- appointment after that period.