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Government amends Companies (Appointment and Qualification of Directors) Fifth Amendment Rules, 2014 easing norms for independent directors

18.12.2020

Central Government amends Companies (Appointment and Qualification of Directors) Fifth Amendment Rules, 2014 in exercise of powers conferred under Section 149 read with Section 469 of the Companies Act, 2013. Now the amendment grants two years to directors to pass the online proficiency test from the date of their inclusion in the database of independent directors, from the earlier one year. In order to pass the test and to get their names enrolled, the requirement of 60 percent score is now changed to 50 percent.

Further, the amended rule also eases the experience requirement for those who have already held directorships to be exempt from the test, lowering it to three years from the earlier 10 years. An individual shall not be required to take people the proficiency test who have served for three years on the board of entities like listed companies, unlisted companies with Rs. 10 crore or more paid up capital, non-resident companies with $2 million paid up capital or a commercial entity set up under a central or state law need not take the proficiency test. Further, officers with three years experience as a director and in the pay scale of director or above in the MCA, or in the Ministries of Finance, Commerce and Industry or Heavy Industries and Public Enterprise and experience in handling matters relating to corporate laws or securities laws or economic laws are exempted from the online self proficiency test.

The Ministry of Corporate Affairs, with the objective of strengthening the institution of Independent Directors under the Companies Act, launched to the Independent Director’s Databank in accordance with the provisions of the Companies Act, 2013 and the rules made thereunder. The Databank is a pioneering initiative of the Ministry to provide an easy to access and navigate platform for the registration of existing Independent Directors as well as individuals aspiring to become independent directors.

Tags : Rules Amendment Independent directors

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