New Delhi : Independent directors appointed for a second term at corporates can now be removed only by a special resolution passed by shareholders, with the government tightening the rules. Before removal, such independent directors should also be given “reasonable opportunity of being heard”, the corporate affairs ministry said.

A special resolution requires approval from at least 75 per cent shareholders present at a meeting whereas only a minimum of 50 per cent is needed in case of ordinary resolutions.

The decision is to ensure better corporate governance and balancing of powers of the boards. In this regard, the ministry has issued a ‘Removal of Difficulties’ order to introduce a new provision under Section 169 of the Companies Act. Section 169 pertains to removal of directors. An independent director appointed for a second term shall be removed only by passing a special resolution and after giving him a reasonable opportunity of being heard, the order, said.

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