Ministry of Corporate affairs has notified four new rules as on 22nd October, 2019 namely Data Bank Notification relating to IICA, Companies (Accounts) Amendments Rules, 2019, Companies (Creation and Maintenance of Databank of Independent Directors) Rules, 2019 and Companies (Appointment and Qualification of Directors) Fifth Amendment Rules, 2019.
There are two things that need to be done now for all Would Be and Existing Independent Directors of the Company. First, they have to get themselves registered online in the databank of Independent Directors that will be maintained by the Indian Institute of Corporate Affairs, Manesar (Haryana) and second, they have to clear a Common Proficiency Test as will be conducted by the Institute.
Here is a small attempt to put a brief picture of these rules :
Registering online on the Data Bank:
Applicable to :
- All individuals who are already appointed as Independent Directors on the Board of any Company before the commencement of these respective rules i.e. before 1st December, 2019.
- All the Individuals who intends to get appointed as an Independent Director in a Company after 01st December, 2019
- Individuals who are already appointed as Independent Directors – within 3 months of commencement of these rules, i.e. by 1st March, 2019.
- Individuals who intend to get appointed as Independent Directors – Before their appointment
- Application for registration of one’s name in the databank has to be made online to the Indian Institute of Corporate Affairs, Manesar (Haryana)
- The application can be made for a period of 1 year or 5 years or for Lifetime.
- Renewal application has to be filed within 30 days of expiry of the period already applied for.
- If Renewal application is not filed within 30 days, the names will stand removed from the databank.
- Renewal need not to be made by those who have registered themselves for lifetime with the Institute.
- The renewal can be again for 1 year or 5 years or for the Lifetime.
- Every Independent Director shall submit a declaration of registration or renewal in the databank to the Board each time they submit the declaration under section 149 (7) of the Act.
- A reasonable fee will be charged from:
- Individuals for inclusion of their names in the Databank.
- Companies who seek the Information of Independent Directors from the Institute.
After the Inclusion of name in the Data Bank is done:
1. Every Individual whose name is included in the databank has to pass a COMMON PROFICIENCY TEST as conducted by the institute.
2. This test has to be passed within a period of 1 year from the date of inclusion of name in the Data Bank. For eg.- If the name was included on 1st Feb, 2020 than the test can be passed till 1st Feb 2021.
3. If the test is not taken within 1 year the name will stand removed from the Databank.
4. Passing marks- 60% or more
5. Attempts- No maximum limit of attempts is set as of now for clearing the test.
- Company law, Securities law, Basic accountancy and such other areas as are relevant to the functioning of an Individua acting as an Independent Director.
- Online Lessons including Audio Visuals and Basic Study Material will be provided by the Institute.
- No additional fees will be charged for providing such study material and conducting online test.
- An Individual who has been serving for a period of 10 years or more as a Director or a KMP in a listed Company or in an unlisted public company having a paid-up share capital of Rs 10 crore or more shall be exempted from the online proficiency test.
- Any period during which an Individual was acting as a Director or KMP in two or more Companies at the same time will be counted only once. For eg. If an Individual has been a director in 3 companies from the year 2015-2019 than a total period of 4 years only will be counted irrespective of him being appointed on 3 different Boards.
CS Barkha Arora
Company Secretary and Compliance officer
Solitaire machine Tools limited.