Independent Directors – Online Proficiency Self-Assessment Test

Independent Directors – Online Proficiency Self-Assessment Test

Introduction

Independent Directors play an important role of a watchdog. They ensure that the cases of corporate misgovernance do not occur. Independent Directors or Non-Executive Directors join the board of directors in different capacities. They come from different backgrounds and have diverse skill sets. There is also an increasing demand for Independent Directors with impeccable records. Realizing the increasing complexity among the working of Independent Directors, the Ministry of Corporate Affairs and the Indian Institute of Corporate Affairs (IICA) has designed online courses. These e-courses aim to refresh the basic knowledge base and enhance the efficiency of Non-Executive Directors.

Participants will be trained to be globally oriented and be more focused in their pursuit of knowledge. Through online courses, the Ministry of Corporate Affairs aims at building an effective company board, which is aware of all the aspects of corporate governance. Ministry also wants to cater to the future demands for professional, knowledgeable, and effective Independent Directors. Online courses are a consolidation of relevant clauses of the Companies Act, 2013, Listing Obligations and Disclosure Requirements (LODR) of SEBI, and different case studies. These online courses will help in shaping professionalism among Non-Executive Directors through the “International Best Practices”.

Self-Assessment Test

The Indian Institute of Corporate Affairs (IICA) under Section 150(1) of the Companies Act, 2013 to conduct Online Proficiency Self-Assessment. IICA by complying with Rule 6(1) of the Companies (Appointment and Qualification of Directors) Rules, 2014 will conduct this test through this Independent Director’s Databank.

Please read through this page for more information on features and process of this test.

Features

This test will be based on all relevant topics on functioning of an individual acting as an Independent Director, such as:

1. Companies Law

2. Securities Law

3. Basic Accountancy

4. Corporate Governance

Process Outline for Test

Individuals empaneled in the Independent Director’s Databank will have to follow these steps for attempting the Online Proficiency Self-Assessment Test:

Steps:

1. Login into the Databank

2. Go to the dashboard

3. Select the slot as per your convenience for attempting the test

4. Attempt the test as per the slot booked

5. Get test result and reports published

6. There is no limit on the number of attempts to pass the test

Rules pertaining to Self-Assessment Test

Every individual whose name is included in the databank under sub-rule (1) shall pass an Online Proficiency Self-Assessment test conducted by IICA within a period of two years from the date of inclusion of his name in the databank, failing which, his name shall stand removed from this databank.

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:

A. as director or key managerial personnel as on the date of inclusion of his name in the databank, in one or more of the following, namely:

a) listed public company; or

b) unlisted public company having a paid-up share capital of rupees ten crore or more; or

c) body corporate listed on any recognized stock exchange or in a country which is a member State of the Financial Action Task Force on Money Laundering and the regulator of the securities market in such member State is a member of the International Organization of Securities Commissions; or

d) bodies corporate incorporated outside India having a paid-up share capital of US$ 2 million or more; or

e) statutory corporations set up under an Act of Parliament or any State Legislature carrying on commercial activities; or

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

C. in the pay scale of Chief General Manager or above in the Securities and Exchange Board or the Reserve Bank of India or the Insurance Regulatory and Development Authority of India or the Pension Fund Regulatory and Development Authority and having experience in handling the matters relating to corporate laws or securities laws or economic laws

Provided further that for the purpose of calculation of the period of three years referred to in the first proviso, any period during which an individual was acting as a director or as a KMP in two or more companies or body corporates or statutory corporations at the same time shall be counted only once.

An individual who has obtained a score of not less than 50% in aggregate in the online proficiency self-assessment test shall be deemed to have passed such test.

There shall be no limit on the number of attempts an individual may take for passing the online proficiency self-assessment test.

There must be a gap of 1 day between 2 slots booked by an individual for attempting the online self-assessment test. If an individual fails to pass the test on a particular slot or misses the slot due to any reasons, the next slot can only be booked after 1 day from the previous booked slot date and time.

Scheme of Online Proficiency Self-Assessment Test

Total marks 100

Total no. of  MCQs 50

Total Test duration 75 minutes

Mark assign to each question 2 marks

Average time allotted to each question 1.5 minutes

Break-up of questions

Board Essential

25 MCQs

Nature of Questions

Direct

Board Practical

25 MCQs

Nature of Questions

Scenario Based

Structure 

Board Essentials Courses topic covered are as under:

1. Incorporation of Companies

2. Share Capital

3. General Meetings

4. Accounts of Companies

5. Debentures and Bonds

6. Acceptance of Deposits

7. Prospectus and allotment of shares

8. Related Party Transactions

9. Audit & Auditors

10. Mergers Amalgamation (M&As)

11. Institution of Directors

12. Duties of Directors

13. Liability of Directors and KMP

14. Oppression & Mismanagement

15. Safeguarding directors

16. Penalties and compounding of offences

17. SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015 (LODR)

18. Board Committees

19. Secretarial Audit & Compliances

20. Board Meetings

21. Secretarial Standard 2

22. Corporate Social Responsibility

23. How to Read Balance Sheet?

24. Decoding Financial Statements

25. Professional Ethics for Independent Directors

Board Practice Courses topic covered are as under:

1. Due Diligence Before Joining a Board

2. Exemplary Board

3. Board Effectiveness & Culture

4. Building Resilient Company: Board’s Role

5. Governance of Committees

6. Governance of Strategy

7. Managing CSR & Engaging Stakeholders

8. Managing Trough Financial Ratios

9. Board Evaluation

10. Evaluation of Independent Directors

11. Case Study – WorldCom

12. Case Study – Enron Corporation

13. Case Study – VOLKSWAGEN

14. Case Study – Olympus

15. Case Study – Hydro One

16. Case Study – Satyam

17. Case Study – Maruti Suzuki