Amendment in provisions of independent director

SHORT SUMMARY

As per the recent Notification on 19th August 2021, MCA has issued The Companies (Appointment and Qualification of Directors) Amendment Rules, 2021. These Rules came into effect on 20th August 2021.

Provisions before Amendment: {Rule 6(4)}

I. Compliances required by a person eligible and willing to be appointed as an independent director

(4) Every individual whose name is so included in the data bank under sub-rule (1) shall pass an online proficiency self-assessment test conducted by the institute within a period of 8 [Two years from] the date of inclusion of his name in the data bank, failing which, his name shall stand removed from the databank of the institute:

Provided that an individual shall not be required to pass the online proficiency self-assessment test when he has served for a total period of not less than three years as on the date of inclusion of his name in the data bank,-

(B) in the pay scale of Director or above in the Ministry of Corporate Affairs or the Ministry of Finance or Ministry of Commerce and Industry or the Ministry of Heavy Industries and Public Enterprises and having experience in handling the matters relating to corporate laws or securities laws or economic laws; or

Extract of Amendment

Amendment 1: in the first proviso, for clause (B), the following clause shall be substituted, namely:

"(B) in the pay scale of Director or equivalent or above in any Ministry or Department, of the Central Government or any State Government, and having experience in handling,

(i) the matters relating to commerce, corporate affairs, finance, industry or public enterprises; or

(ii) the affairs related to Government companies or statutory corporations set up under an Act of Parliament or any State Act and carrying on commercial activities.'.

Amendment 2: (ii) after the second proviso, the following proviso shall be inserted, namely:

"Provided also that the following individuals, who are or have been, for at least ten years:

(A) an advocate of a court; or
(B) in practice as a chartered accountant; or
(C) in practice as a cost accountant; or
(D) in practice as a company secretary,

shall not be required to pass the online proficiency self-assessment test.'.

Effect of Amendment

Now, after this amendment following also are exempt to pass online proficiency test to add his name in Independent Director Data Bank:

1. in the pay scale of Director or equivalent or above in any Ministry or Department, of the Central Government or any State Government, and having experience in handling, -

(i) the matters relating to commerce, corporate affairs, finance, industry or public enterprises; or

(ii) the affairs related to Government companies or statutory corporations set up under an Act of Parliament or any State Act and carrying on commercial activities.'.

2. Following individual having qualification for at least 10 years as

(A) an advocate of a court; or
(B) in practice as a chartered accountant; or
(C) in practice as a cost accountant; or
(D) in practice as a company secretary,

Disclaimer: The entire contents of this document have been prepared based on relevant provisions and as per the information existing at the time of the preparation. Although care has been taken to ensure the accuracy, completeness, and reliability of the information provided, I assume no responsibility, therefore. Users of this information are expected to refer to the relevant existing provisions of applicable Laws. The user of the information agrees that the information is not professional advice and is subject to change without notice. I assume no responsibility for the consequences of the use of such information.