- (1.) THIS petition has been filed by the Indian Energy Exchange Limited (IEX) for inclusion of the names of two additional persons in the panel of Independent Directors to be appointed on the Board of the Exchange.
(2.) IEX which was accorded approval by the Commission to establish and operate a power exchange, vide order dated 31.8.2007 in Petition No. 38/2007, is deemed to have been registered under the Central Electricity Regulatory Commission (Power Market) Regulations, 2010 (hereinafter "Power Market Regulations") which came into force from 21.1.2010. According to Regulation 22(ii) of the Power Market Regulations, the petitioner is required to have 1/3rd of its members of the Board as Independent Directors subject to minimum of two. The said Regulation is extracted hereunder: - "(ii) Independent Directors -At least one third of the members of the Board or a minimum of two directors, whichever is higher, shall be independent directors selected from a panel constituted by the Power Exchange and approved by the Commission out of which one person will have professional qualification and experience in finance. The panel shall be constituted of persons of repute and integrity from academics, professionals, industry representatives, public figures none of whom should have any interest in any Member of Power Exchange and any fiduciary relationship with any shareholder of Power Exchange."
(3.) THE Commission, in its order dated 7.8.2013 in Petition No. 113/2011, while approving the panel of Independent Directors discussed the requirements for appointment as Independent Directors in the said order and they are as follows: - "7. The term 'Independent Director' has not been defined in the Power Market Regulations or Companies Act, 1956. The Judicial Dictionary defines Independent Director to mean a non -executive Director who apart from receiving Director's remuneration, do not have any material/pecuniary relationship or transaction with the company, its promoters, its directors, its senior management or its holding company, its subordinates or associates which in the judgment of the Board may affect the independence of the judgment of the Director. According to Clause 49 of the Listing agreement, the definition of the term 'Independent Director' would mean a non -executive director who: (a) Does not have a pecuniary relationship with the company, its directors, its promoters, senior management or affiliate companies; (b) Is not related to the promoters or senior management; (c) Is not a partner or executive of the auditors/lawyers/consultants of the company for the last three years; (d) Is not a supplier, service provider or customer of the company; (e) Does not have more than 2% of the shares of the company. 8. Further Regulation 22(ii) of the Power Market Regulations provides that none of the persons in the panel should have any interest in any Member of the Power Exchange and have fiduciary relationship with any shareholders of the Power Exchange. Fiduciary relationship has not been defined in the Power Market Regulations. According to Law Dictionary, fiduciary relationship exists when one person places complete confidence in another person in regard to any particular transaction or general affairs or business. In the context of the Power Market Regulations, none of the persons included in the panel of Independent Directors should have any interest in any member of the exchange or be involved in the general affairs or business of any shareholder of the exchange." The petitioner's Board of Directors consists of eleven members according to the petitioner, and as per Regulation 22(ii) of the Power Market Regulations the petitioner's Board should consist of four Independent Directors. The Commission in order dated 3.5.2010 in Petition No. 138/2010 has held that the panel for appointment of Independent Directors should be double the number of Independent Directors required to be appointed. On the date of application there were three Independent Directors and the petitioner was required to appoint one more Independent Director.;