Hi Guru, I have total of 25+ years of experience out of which 7+ years in mechanical industry and 18 years as SAP consultant . Now a days I heard lot about independent director . Now I want to know about independent director . What are the job responsibilities of independent director? Can I become independent director of a company ? Is it right time to shift a career from SAP consulting to another one.

Ans: Sandeep, your options depend upon your skill sets, business orientation, risk taking capabilities etc. The capital requirements may also depend based on what you finally decide to do. As a rule, plunge into your own venture when you savings that will last you at least 12-15 months, without a salary. This is over and above what you will need to invest in the business. So select the business carefully, create a detailed business plan evaluating the capex and opex requirement, see how you will raise the money and how you will manage your own expenses for the next 12-18 months, before the business starts paying you anything at all.

Ans: If you aren't getting a proper response from the director, you should convey the same to your manager or someone senior in your team so that they can communicate with the director and discuss the reasons and solutions for the issues. Clear communication with your team members would help you in the decision-making.

Ans: Hello Praveen, thank you for your question. An independent director is a non-executive director of a company who helps the company in improving corporate credibility and governance standards. The role of an independent director is to provide an impartial opinion as they are not part of the company’s existing management. The Companies Act, 2013 has defined the term “Independent Director” along with several new requirements relating to their appointment, duties, role, and responsibilities.

The provisions relating to the appointment of Independent directors are contained in Section 149 of the Companies Act, 2013 should be read along with Rule 4 and Rule 5 of the Companies (Appointment and Qualification of Directors) Rules, 2014 1. The Companies Act, 2013 mandates certain companies to have independent directors on their Board of Directors.

As for your question about becoming an independent director, it is possible for you to become one. However, the eligibility criteria for becoming an independent director are defined by the Companies Act, 2013 and the Securities and Exchange Board of India (SEBI). The eligibility criteria include qualifications, experience, and other factors such as age, independence, and expertise.

In terms of roles and responsibilities, independent directors have several duties such as:

Undertaking appropriate induction and regularly updating and refreshing their skills, knowledge, and familiarity with the company.
Attempting to attend the company’s general meetings.
Attempting to attend Board of Director’s meetings and board committees meeting being a member.
Providing independent judgment to the board on matters such as finances, strategy, performance, risk management, and key appointments.
Playing an active role in succession-planning.
Protecting the interests of all stakeholders.
I hope this helps. If you have any more questions, feel free to ask!

Ans: Current Financial Status
Age and Income

You are 35 years old.

You earn Rs. 57k per month from a contract job.

Investments

SIP: Rs. 30k per month starting April 2024.

Lumpsum: Rs. 10 lakh in mutual funds.

Dependents

One daughter, 8 years old.
Appreciating Your Proactive Steps
You have taken significant steps toward financial security.

Your commitment to SIPs and mutual funds is commendable.

Financial Independence Planning
Emergency Fund

Priority: Build an emergency fund first.

Amount: Save 6-12 months of expenses in a liquid fund.

Review and Diversify Investments
Mutual Funds

Actively Managed Funds: Focus on these for better returns.

Diversification: Ensure a mix of equity and debt funds.

Avoid Direct Funds

Lack of Guidance: Direct funds can be risky without professional advice.

Professional Support: Regular funds with CFP guidance are better.

Child's Future Planning
Education Fund

SIPs: Allocate a portion of SIPs towards an education fund.

Long-term Goals: Aim for a dedicated education corpus.

Insurance Needs
Health Insurance

Coverage: Ensure adequate health insurance for you and your daughter.

Review: Check if current policies cover all potential health risks.

Life Insurance

Term Plan: Get a term insurance plan for financial protection.

Sum Assured: Opt for coverage that is at least 10-15 times your annual income.

Retirement Planning
NPS (National Pension System)

Contributions: Consider starting or increasing contributions to NPS.

Benefits: NPS offers good returns and tax benefits.

Disadvantages of Index Funds
Lower Returns

Market Mimicry: Index funds only match market performance.

No Active Management: Lack adaptability and expert intervention.

Regular Review and Adjustments
Periodic Review

Regular Checks: Review your financial plan every six months.

Adjustments: Make necessary adjustments based on market conditions and personal changes.

Additional Income Streams
Skill Development

Enhance Skills: Invest in learning new skills relevant to your field.

Freelancing: Consider freelancing or part-time projects for additional income.

Final Insights
Building an emergency fund is crucial.

Diversify your mutual fund investments.

Focus on education and retirement planning.

Ensure adequate health and life insurance.

Regularly review and adjust your financial plan.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in