Compliance related to Maintenance of Databank of Independent Directors by Institute notified by Central Government
Section 150 of the Companies Act, 2013 deals with manner of selection of Independent Directors and maintenance of databank for Independent Directors wherein institute for creation and maintenance of databank be notified by Central Government.
Ministry of Corporate Affairs notified Companies (Creation and Maintenance of databank of Independent Directors) Rules, 2019 wherein Indian Institute of Corporate Affairs (IICA) has been notified by the Central Government for creation and maintenance of databank for Independent Directors. Also, Companies (Appointment and Qualification of Directors) Fifth Amendment Rules, 2019, and the Companies (Accounts) Amendment Rules, 2019 dated 22nd October, 2019 have also been notified which shall be effective from 1st December, 2019 in relation to this.
IICA shall maintain a databank of persons willing and eligible to be appointed as independent directors, and such databank shall be an online databank, which shall be placed on the website of the institute.
Explanation:- The expression “persons willing and eligible to be appointed as independent director” shall include individuals already serving as independent directors on the Board of companies.
Applicability, Compliance & Time period:
|Rule 6 of Companies (Appointment and Qualification of Directors) Fifth Amendment Rules, 2019:||Particulars of Compliance||Time period|
|1||Sub-rule (1)||INCLUSION OF NAME IN DATABANK
a) Individuals already appointed as an Independent Directors as on 1st December, 2019
|Up to 29th February, 2020|
|b) Individuals willing and eligible to be appointed as Independent Directors after 1st December, 2019||Before his appointment|
|2||Sub-rule (2)||RENEWAL OF NAME IN DATABANK
Inclusion of name may be for 1 year/5 years/ lifetime. Application for renewal to be made for further period except for lifetime inclusion of name.
|Within 30 days from the date of expiry of period as may be applicable.|
|3||Sub-rule (3)||DECLARATION OF COMPLIANCE OF ABOVE||To be included in declaration u/s. 149(7) of the Companies Act, 2013.|
|4||Sub-rule (4)||PASSING ONLINE PROFICIENCY SELF-ASSESSMENT TEST
For all individuals whose names are so included above.
|Within one year from inclusion of name in databank|
*Exemption: Individual who has served for not less than 10 years as on date of inclusion of his/her name in the databank as director or KMP in a listed company or unlisted public company having paid-up share capital of Rs. 10 crore or more.
Any period during which an individual was acting as director or KMP in two or more companies at same time shall be counted as one.
Further, Companies (Accounts) Amendment Rules, 2019 notification dated 22nd October, 2019 effective from 1st December, 2019, requires Companies to include statement regarding opinion of the Board with regard to integrity, expertise and experience (including the proficiency) of the independent directors appointed during the year.
Here, ‘Proficiency’ shall mean the proficiency of Independent Director as ascertained from the online proficiency self-assessment test conducted by the Institute i.e. IICA.