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ABC Limited has three directors. Director X is also a legal consultant who advises on all the affairs of ABC Limited. Director Y is also the Chief Executive Officer of ABC Limited. Director Z is not connected to ABC Limited in any other way apart from her directorship except that she is also the Chief Executive Officer of the largest customer of ABC Limited. Which of the directors may be termed an independent director? Principle Independent directors are directors who, apart from receiving director's remuneration, do not have any material pecuniary relationship or transaction with the company, its management or its subsidiaries, which may affect their independence of judgment.
  • a)
    Director X and Director Y are independent directors.
  • b)
    Director X, Director Y, and Director Z are all independent directors.
  • c)
    None of them are independent directors
  • d)
    Director Y and Director Z are independent directors.
Correct answer is option 'C'. Can you explain this answer?
Most Upvoted Answer
ABC Limited has three directors. Director X is also a legal consultant...
Reasoning:
According to the principle of independent directors, directors who have a material pecuniary relationship or transaction with the company, its management, or its subsidiaries may not be considered independent. Let's analyze the directors' connections to ABC Limited:
  • Director X: Although Director X is a legal consultant who advises on all the affairs of ABC Limited, it is not mentioned that Director X has any material pecuniary relationship or transaction with the company. Therefore, Director X may be considered an independent director.
  • Director Y: Director Y holds the position of Chief Executive Officer of ABC Limited. As the CEO, Director Y is closely involved in the management and decision-making processes of the company, which creates a material pecuniary relationship. Therefore, Director Y cannot be considered an independent director.
  • Director Z: Director Z is not connected to ABC Limited apart from her directorship. However, it is mentioned that Director Z is also the Chief Executive Officer of the largest customer of ABC Limited. This creates a material pecuniary relationship between Director Z and ABC Limited, as the company's largest customer. Therefore, Director Z cannot be considered an independent director.
In conclusion, none of the directors (Director X, Director Y, or Director Z) meet the criteria to be considered independent directors, as they all have material pecuniary relationships or transactions with ABC Limited.
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ABC Limited has three directors. Director X is also a legal consultant who advises on all the affairs of ABC Limited. Director Y is also the Chief Executive Officer of ABC Limited. Director Z is not connected to ABC Limited in any other way apart from her directorship except that she is also the Chief Executive Officer of the largest customer of ABC Limited. Which of the directors may be termed an independent director? Principle Independent directors are directors who, apart from receiving directors remuneration, do not have any material pecuniary relationship or transaction with the company, its management or its subsidiaries, which may affect their independence of judgment.a)Director X and Director Y are independent directors.b)Director X, Director Y, and Director Z are all independent directors.c)None of them are independent directorsd)Director Y and Director Z are independent directors.Correct answer is option 'C'. Can you explain this answer?
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ABC Limited has three directors. Director X is also a legal consultant who advises on all the affairs of ABC Limited. Director Y is also the Chief Executive Officer of ABC Limited. Director Z is not connected to ABC Limited in any other way apart from her directorship except that she is also the Chief Executive Officer of the largest customer of ABC Limited. Which of the directors may be termed an independent director? Principle Independent directors are directors who, apart from receiving directors remuneration, do not have any material pecuniary relationship or transaction with the company, its management or its subsidiaries, which may affect their independence of judgment.a)Director X and Director Y are independent directors.b)Director X, Director Y, and Director Z are all independent directors.c)None of them are independent directorsd)Director Y and Director Z are independent directors.Correct answer is option 'C'. Can you explain this answer? for CLAT 2024 is part of CLAT preparation. The Question and answers have been prepared according to the CLAT exam syllabus. Information about ABC Limited has three directors. Director X is also a legal consultant who advises on all the affairs of ABC Limited. Director Y is also the Chief Executive Officer of ABC Limited. Director Z is not connected to ABC Limited in any other way apart from her directorship except that she is also the Chief Executive Officer of the largest customer of ABC Limited. Which of the directors may be termed an independent director? Principle Independent directors are directors who, apart from receiving directors remuneration, do not have any material pecuniary relationship or transaction with the company, its management or its subsidiaries, which may affect their independence of judgment.a)Director X and Director Y are independent directors.b)Director X, Director Y, and Director Z are all independent directors.c)None of them are independent directorsd)Director Y and Director Z are independent directors.Correct answer is option 'C'. Can you explain this answer? covers all topics & solutions for CLAT 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for ABC Limited has three directors. Director X is also a legal consultant who advises on all the affairs of ABC Limited. Director Y is also the Chief Executive Officer of ABC Limited. Director Z is not connected to ABC Limited in any other way apart from her directorship except that she is also the Chief Executive Officer of the largest customer of ABC Limited. Which of the directors may be termed an independent director? Principle Independent directors are directors who, apart from receiving directors remuneration, do not have any material pecuniary relationship or transaction with the company, its management or its subsidiaries, which may affect their independence of judgment.a)Director X and Director Y are independent directors.b)Director X, Director Y, and Director Z are all independent directors.c)None of them are independent directorsd)Director Y and Director Z are independent directors.Correct answer is option 'C'. Can you explain this answer?.
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Principle Independent directors are directors who, apart from receiving directors remuneration, do not have any material pecuniary relationship or transaction with the company, its management or its subsidiaries, which may affect their independence of judgment.a)Director X and Director Y are independent directors.b)Director X, Director Y, and Director Z are all independent directors.c)None of them are independent directorsd)Director Y and Director Z are independent directors.Correct answer is option 'C'. Can you explain this answer?, a detailed solution for ABC Limited has three directors. Director X is also a legal consultant who advises on all the affairs of ABC Limited. Director Y is also the Chief Executive Officer of ABC Limited. Director Z is not connected to ABC Limited in any other way apart from her directorship except that she is also the Chief Executive Officer of the largest customer of ABC Limited. Which of the directors may be termed an independent director? Principle Independent directors are directors who, apart from receiving directors remuneration, do not have any material pecuniary relationship or transaction with the company, its management or its subsidiaries, which may affect their independence of judgment.a)Director X and Director Y are independent directors.b)Director X, Director Y, and Director Z are all independent directors.c)None of them are independent directorsd)Director Y and Director Z are independent directors.Correct answer is option 'C'. Can you explain this answer? has been provided alongside types of ABC Limited has three directors. Director X is also a legal consultant who advises on all the affairs of ABC Limited. Director Y is also the Chief Executive Officer of ABC Limited. Director Z is not connected to ABC Limited in any other way apart from her directorship except that she is also the Chief Executive Officer of the largest customer of ABC Limited. Which of the directors may be termed an independent director? Principle Independent directors are directors who, apart from receiving directors remuneration, do not have any material pecuniary relationship or transaction with the company, its management or its subsidiaries, which may affect their independence of judgment.a)Director X and Director Y are independent directors.b)Director X, Director Y, and Director Z are all independent directors.c)None of them are independent directorsd)Director Y and Director Z are independent directors.Correct answer is option 'C'. Can you explain this answer? theory, EduRev gives you an ample number of questions to practice ABC Limited has three directors. Director X is also a legal consultant who advises on all the affairs of ABC Limited. Director Y is also the Chief Executive Officer of ABC Limited. Director Z is not connected to ABC Limited in any other way apart from her directorship except that she is also the Chief Executive Officer of the largest customer of ABC Limited. Which of the directors may be termed an independent director? Principle Independent directors are directors who, apart from receiving directors remuneration, do not have any material pecuniary relationship or transaction with the company, its management or its subsidiaries, which may affect their independence of judgment.a)Director X and Director Y are independent directors.b)Director X, Director Y, and Director Z are all independent directors.c)None of them are independent directorsd)Director Y and Director Z are independent directors.Correct answer is option 'C'. Can you explain this answer? tests, examples and also practice CLAT tests.
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