Section 5
Independence from substantial shareholder
of Companies (Corporate Governance) (Public Companies) Rules, 2016
(1)
In these Rules, a director of a public company shall be considered to be independent from a substantial shareholder of the company or of any related corporation if he is not that substantial shareholder and is not connected to that substantial shareholder.
(2)
Notwithstanding subrule (I), a director of a public company which is the immediate subsidiary of another public company (referred to in this subrule as the parent company) shall, if he is not a substantial shareholder of the public company or the parent company and is not connected to -
(a)
a substantial shareholder of the public company (other than the parent company); or
(b)
a substantial shareholder of the parent company, be treated as if he were independent from the substantial shareholder of the public company for the purposes of rules 6(1) and 7.
(3)
For the purposes of subrule (I), a person is connected to a substantial shareholder if he is -
(a)
in the case where the substantial shareholder is an individual -
(i)
a member of the immediate family of the substantial shareholder;
(ii)
. employed by the substantial shareholder;
(iii)
employed by an affiliate of the substantial shareholder;
(iv)
an executive director of an affiliate of the substantial shareholder;
(v)
a non-executive director of an affiliate of the substantial shareholder;
(vi)
a partner of a firm or a limited liability partnership of which the substantial shareholder is also a partner; or
(vii)
accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of the substantial shareholder; or
(b)
in the case where the substantial shareholder is a corporation -
(i)
employed by the substantial shareholder;
(ii)
employed by an affiliate of the substantial shareholder;
(iii)
a director of the substantial shareholder;
(iv)
an executive director of an affiliate of the substantial share holder;
(v)
a non-executive director of an affiliate of the substantial shareholder;
(vi)
a partner of a firm or a limited liability partnership of which the substantial shareholder is also a partner; or
(vii)
accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of the substantial shareholder.
Board of directors 6.
(1)
A public company shall have a board of directors comprising at least a majority of directors who are independent directors.
(2)
Any public company which contravenes subrule (1) is guilty of an offence and liable on conviction to a fine not exceeding $25,000 and, in the case of a continuing offence, to a further fine not exceeding $2,500 for every day or part thereof during which the offence continues after conviction.
.