INTRODUCTION

Independent Directors serve as an important Institution of corporate governance contributing significantly at the boards by bringing a diverse set of skills with an independent judgement on the significant issues. Independent Directors need to act as the custodians of good governance by discharging monitoring and advisory role effectively.

They need to act in the interest of the company and the interest of all stakeholders. 

APPLICABILITY OF APPOINTMENT OF INDEPENDENT DIRECTORS: Section 149 (4) of the Companies Act, 2013;

EVERY LISTED PUBLIC COMPANY shall have at least one-third of the total number of directors as independent directors  

OR

PUBLIC COMPANIES;

√ Having paid up share capital of ten crore rupees or more; or

√ Having turnover of one hundred crore rupees or more; or

√ Debt in aggregate of, outstanding loans, debentures and deposits, exceeding fifty crore rupees.

Shall have at least two directors as independent directors

Exemption: Except Unlisted Public Companies; such as (a) a joint venture (b) a wholly owned subsidiary; and (c) a dormant company as defined under section 455 of the Act are exempt from appointment of Independent Directors. 

MANNER OF SELECTION OF INDEPENDENT DIRECTORS & MAINTENANCE OF DATABANK OF INDEPENDENT DIRECTORS: Section 150 of the Companies Act, 2013

An Individual who are eligible and willing to act as independent directors is required to be selected from a data bank as prescribed by the Central Government under rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2014.

Exemption: In case of Section 8 Companies, Section 150 shall not apply (Notification No. GSR 466(E), dated 5-6-2015) 

OBJECTIVES OF DATA BANK 

♦ Develop a databank of Independent directors by way of empanelment of existing Independent Directors as well as the professionals aspiring to become independent directors.

♦ Build capacities of Individuals by delivering eLearning courses on topics related to corporate governance, regulatory framework, financial prudence, and other important aspects.

♦ Provide a platform to individuals to help them acquire knowledge, develop new skills, assess their understanding, and apply best practices.

♦ Create an eco-system of individuals looking for opportunities and corporate requiring to appoint independent directors.

Process Flow

COMPLIANCES REQUIRED BY A PERSON ELIGIBLE AND WILLING TO BE APPOINTED AS AN INDEPENDENT DIRECTOR. (MCA VIDE NOTIFICATION DATED OCTOBER 22, 2019 SUBSTITUTED RULE 6 OF THE COMPANIES (APPOINTMENT AND QUALIFICATION OF DIRECTORS) RULES, 2014 AS FOLLOWS) —

PARTICULARS EXISTING INDEPENDENT DIRECTORS INTEND TO GET APPOINTED AS INDEPENDENT DIRECTORS
Apply online to the institute for inclusion of his name in the data bank On or Before February 29, 2020 On Or After December 1, 2019
Submission of Declaration of compliance of sub-rule (1) and sub-rule (2) of Rule 6 At First Board Meeting of Every Financial year At First Board Meeting of the Board in which Act as Independent Director and thereafter At First Board Meeting of Every Financial year
Online proficiency self-assessment test Within 1 year of their inclusion of name in the databank. Within 1 year of their inclusion of name in the databank.
Exemption from Passing proficiency self-assessment test Individual who has served for a period of not less than ten years as on date of inclusion of his name in the databank as director or key managerial personnel in a listed public company or in an unlisted public company having a paid up share capital of rupees ten crore or more

FAQS AS PER IICA;

Q 1. What are the important dates and timelines?

Ans: > Start date for Empanelment/registration of individuals and companies – December 1st, 2019

> End Date for empanelment of existing Independent Directors – February 29, 2020

> Start date for slot booking for online proficiency self-assessment test – December 2nd, 2019

> Start date for Mock (Practice) Test – December 2nd, 2019 onwards

> Start date for online proficiency self-assessment test – March 01, 2020

> Start date for corporate access and search facility – March 01, 2020

Q 2. Which Institute is authorized by MCA to maintain the databank of Independent Directors, provide online courses, and conduct online proficiency self-assessment test?

Ans: Indian Institute of Corporate Affairs (IICA) as notified under sub-section (1) of section 150 of the Companies Act, 2013 shall create and maintain a databank of persons willing and eligible to be appointed as Independent Directors and also provide for online courses and self-assessment test.

Q 3. Who can apply to be empaneled with databank?

Ans: > Who has been appointed as an independent director in a company, on the date of commencement of the Companies (Appointment and Qualification of Directors) Fifth Amendment Rules, 2019, shall within a period of three months from such commencement.

> Who intends to get appointed as an independent director in a company before such appointment.

Q 4.What information is required to be contained in the databank with reference to the individuals?

Ans: In accordance with Rule 3(2) of the Companies (Creation and Maintenance of databank of Independent Directors) Rules, 2019 the databank will include the information, such as, DIN/PAN, Full Name, Father’s Name, DOB, Gender, Nationality, Occupation, Address, Contact Details, Educational and Professional Qualifications, Experience or Expertise, details of pending criminal proceedings, and Directorship/KMP/LLP positions.

Q 5. Who will provide the information required to be contained in the databank?

Ans: In case of already compliant/registered Independent Directors, their DIR-3-KYC detail (such as, DIN/PAN/Password number, Name, DOB, Father’s name, Mobile Number and Email Address) and their directorship/KMP positions details will be automatically shared with the databank. All other information required for empanelment must be provided by the individual only.

Q 6. Who can access the databank of Independent Directors?

Ans: The information available in the databank shall be provided only to companies required to appoint independent directors after paying a reasonable fee to the institute.

Q 7. What if an Individual wants to protect his personal information in his/her profile?

Ans: As per Rule 3 (4) of the said provisions, a person whose name is included in the databank, can control what information will be displayed or hidden in his/her profile.

Q 8. Can the information once shared by the individuals be changed or modified?

Ans: As per Rule 3(5) of the said provisions, any individual whose name appears in the databank must make changes in his particulars within thirty days of such change in the databank as well.

Q 9. Is there a fee for inclusion of names with the data bank? If yes, what is the structure of fee?

Ans: [Yes, there is a fee for inclusion of name with the databank. As per the Rule 3(7), the institute, with the prior approval of the Central Government, has fixed a fee or Rs. 5,000 (Rupees five thousand + 18% GST) for 1 Year subscription. Fee plan for 5 Year and Life Time inclusion will be notified soon.]

Q 10. Who are exempted from passing the online proficiency self-assessment test?

Ans: As per Rule 6(4) of the Companies (Appointment and Qualification of Directors) Fifth Amendment Rules, 2019, “ the individual who has served for a period of not less than ten years as on date of inclusion of his name in the databank as director or key managerial personnel in a listed public company or in an unlisted public company having a paid up share capital of rupees ten crore or more shall not be required to pass the online proficiency self-assessment test. The exemption feature will be made available soon.

Q 11. What if any individual is a director/KMP in one or more companies at the same time? How will the experience of ten years be calculated?

Ans: As per Rule 6(4) of the Companies Appointment and Qualification of Directors) Fifth Amendment Rules, 2019, “for the purpose of calculation of the period of ten years referred to in the first provision, any period during which an individual was acting as a director or as a key managerial personnel in two or more companies at the same time shall be counted only once.

Q 12. What is the time period for passing the self-assessment test for not exempted Individuals?

Ans: Individuals not exempted are required to pass the basic self-assessment proficiency test within 1 year of their inclusion of name in the databank.

Q 13. In what circumstances the the institute can remove the names of the individuals from the databank?

Ans: As per Rule 6(4) of the Companies (Appointment and Qualification of Directors) Fifth Amendment Rules, 2019, every individual whose name is included in the databank under sub rule (1) shall pass an online proficiency self-assessment test conducted by the institute within a period of one year from the date of inclusion of his name in the databank, failing which, his name shall stand removed from the databank of the institute. This is subject to exemption allowed under the rule for individuals meeting the required experience criteria.

Q 14. What is the pass percentage for passing the online proficiency self-assessment test?

Ans: As per the explanation provided for Rule 6 (4) of the Companies (Appointment and Qualification of Directors) Fifth Amendment Rules, 2019 “an individual who has obtained a score of not less than sixty percent in aggregate in the online proficiency self assessment test shall be deemed to have passed such test”.

Q 15. What if someone whose name has been included in the databank attains the minimum years of directorship/KMP experience at a date post inclusion of his/her name in databank? Will he be required to take the test?

Ans: > The individual whose name is included in the databank does not possess the minimum years of experience as provided in Rule 6 (4) of Companies (Appointment and Qualification of Directors) Fifth Amendment Rules, 2019 shall be required to pass the online proficiency self assessment test.

 > However, if such individual upon attainment of such experience during the course of the year or any time later will be exempted to take the test from the date of attaining such minimum years of experience as provided in the Rule 6 (4) of the said amendment of Rules.

Q 16. Is it mandatory to take the eLearning courses for being included in the databank?

Ans: It is not mandatory to take the eLearning courses; however, it is advisable to take the courses for the purpose of capacity building as well as for ease of passing the online proficiency self-assessment test.

Q 17. Can exempted individuals access the self-assessment test at their own will?

Ans: Yes, all empaneled individuals will be able to access and take the self-assessment test. However, it will be mandatory non-exempted individuals to pass the test within one year of inclusion of their name in the databank.

Q 18. Can an individual continue to take the online self-assessment test even after passing the test with a score of sixty percent?

Ans: Yes, individuals can make multiple attempts for self-assessment even after passing it with minimum score of 60%.

Q 19. How to modify the prefilled data coming from MCA21?

Ans: Prefilled data coming from MCA21, cannot be modified. In order to change any particulars of Directors, you are required to file Form DIR-6 or DIR 3 KYC with MCA.

Q 20. How to change the wrong email id being reflected by MCA21 data?

Ans: In that case, you are required to file Form DIR-6 or DIR 3 KYC with MCA in order to change the email-id particulars.

Q 21. What if the Directorships mentioned in MCA21 does not carry correct date of appointment/cessation?

Ans: Fill up the DIR 3-KYC & DIR-6 for correction of dates.

Q 22. What to do if my registered mobile/email with MCA has changed and I am not receiving the OTP for verification?

Ans: In that case, you are required to file DIR-6 or DIR 3 KYC with MCA in order to change the email-id and receive the required OTP.

Q 23. Can I register if I am not a graduate?

Ans: As per Section 149(6) of Companies Act 2013

(6) An independent director in relation to a company, means a director other than a managing director or a whole-time director or a nominee director,—

(a) who, in the opinion of the Board, is a person of integrity and possesses relevant expertise and experience;

Any individual with relevant expertise and experience, aspiring to be an Independent Director may register with databank.

Therefore, an individual not being a graduate may also register with databank.

Q 24. What is the maximum age of registration with databank?

Ans: There is no minimum or maximum age limit for registration as an Independent Director with databank.

Q 25. What to do if my email is being verified by MCA through company email which I have left years back?

Ans: In that case, you are required to file form DIR-6 or DIR-3 KYC with MCA in order to change the company email to your personal email-id.

Q 26. Is passing the module Post Assessment questions also mandatory?

Ans: No, passing of post assessment quizzes is not mandatory. The post assessment quizzes at the end of each module are only to check learner’s retention.

Q 27. When will the fee for 5 years/lifetime be announced?

Ans: As of now, only the subscription plan for a period 1 year is unlocked, subscription plan for 5 years/lifetime will be unlocked in accordance with the approval of MCA.

REFERENCE:

https://www.independentdirectorsdatabank.in/,

http://www.mca.gov.in/Ministry/pdf/CmpFifthAmndtRules22102019.pdf

Author Bio

Qualification: CS
Company: NAGDEV & ASSOCIATES
Location: Mumbai, Maharashtra, IN
Member Since: 23 Jan 2019 | Total Posts: 5
Mr. Karan Nagdev is an associate member of Institute of Company Secretaries of India (ICSI) with a Bachelor's degree in Commerce, pursuing Law and having extensive experience of more than 4 years in the area of Company Secretarial Compliances of various Category / Sector of Companies including liste View Full Profile

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2 Comments

  1. Diwakar Devender Singh says:

    I have DIN 01291691
    I have registered as Independent Director in MCA Website and login ID is DDSINGH123
    However I am not bale to
    1) Enter the site after Login
    2) Pay Fees if any
    Can you advice

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