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THE Securities and Exchange Board of India has specified that not less than 50 per cent of the board of directors should consist of non-executive directors.
If the chairman of the board is a non-executive director, at least one-third of the board should consist of independent directors and in case he is an executive director, at least half of the board should comprise independent directors.
The new clause also says that compensation paid to non-executive directors, (including independent directors) should be fixed by the board and will require previous approval of shareholders.
A director cannot be a member in more than 10 committees or act as chairman of more than five committees across all companies of which he is a director. Further, the clause specifies a mandatory annual requirement for every director to inform the company about the committee positions he occupies in other companies and notify changes as and when they take place.
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