Recent Development in Respect of Independent Director

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Recent Development in Respect of Independent Director


Ministry of Corporate Affairs amended the Companies Appointment and Qualification of Directors under the rule of 2014.
As per the amended Rule 6(1) every individual who has been appointed as an independent director in a company, on the date of commencement of the Companies. shall within a period of three months from such commencement apply online to the institute for the inclusion of his name in the data bank for a period of one year or five years or for his life-time.


Every individual whose name is so included in the data bank 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 data bank, failing which, his name shall stand removed from the databank of the institute.


MCA has specified the “Institute of Corporate Affairs” at Manesar as the “Institute” for the purpose of this Rule. The said Rules were notified w.e.f 1st December 2019 and accordingly all Independent Directors will be required to get impaneled with the Institute by submitting an application on or before 29th February 2020. Since everyone who is already an Independent Director as on 1st December 2019 details about compliances and timelines is mentioned below for your quick reference:


Independent Directors, she added, need to be more discerning in choosing the right Boards and stay diligent while serving on them. “There have been examples of eminent professionals joining a company board just a few months before it was hit by the scam.”The year 2019 was a tough year for independent directors. In the backdrop of financial failures and governance concerns, the six-year-old institution faced an increased spotlight from both regulators and the public. Resignations by independent directors also doubled in the year.

 If the Board meeting is called at shorter notice so as to transact some urgent business, then the presence of at least 1 independent director is mandatory. In absence of any independent director, a decision shall be circulated to all the directors and later approved by at least 1 independent director.


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