Section 8. Corporate Governance.-

(1)Subject to the provisions of the Companies Act,2013(Central Act No.18 of 2013) the State Government shall ensure that the Board of Directors of the State Distribution Licensee has an optimum combination of functional, nominee and independent directors: Provided that the number of functional directors (including Chairman and Managing Director / Managing Director) shall not exceed fifty percent of the actual strength of the Board: Provided further that the number of nominee directors appointed by the State Government shall be restricted to a maximum of two: Provided also that the number of independent directors shall be as per the provisions of the Companies Act, 2013 (Central Act No. 18 of 2013). Explanation.- „independent director‟ shall have the same meaning as defined in sub-section (5) of section 149 of the Companies Act, 2013(Central Act No.18 of 2013). (2) The State Government shall lay down a code of conduct in line with the Guidelines on Corporate Governance for Public Sector Enterprises, as notified by the Department of Public Enterprises, Government of India, for all Board Members and senior management of the State Distribution Licensee, which shall include but shall not be limited to a clear delineation of the roles and division of responsibilities between the Board and the management.