The Ministry of Corporate Affairs (MCA) has amended the Companies Act, 2013 (applicable w.e.f 1st December, 2019) to make it more stringent for qualifying and appointing independent directors (ID). The Indian Institute of Corporate Affairs (IICA), under MCA, will hold an exam in December, 2019 wherein a score of 60% will be mandatory for qualification.
The following Amendments have been made to Rule 6 of Companies (Appointment and Qualification of Directors) Fifth Amendment Rules, 2019 [vide Notification No. G.S.R. 804(E)]:
Every individual, as mentioned below, shall apply online to IICA for inclusion of their name in the data bank for a period of 1year/5years/ lifetime.
| Who should apply | Prescribed time |
| Individual who has been already appointed as ID as on 1st December, 2019 | Within 3 months from 1st December, 2019 |
| Individual who intends to get appointed as ID after 1st December, 2019 | Before appointment as ID |
| Individual not having Director’s Identification No. (DIN) | Voluntarily apply to IICA |
Such application shall be renewed within 30 days of expiry of the earlier inclusion period (except in case of lifetime inclusion). If not renewed, the name of such individual shall be removed from the data bank.
IDs shall submit a declaration of compliance with the above requirements to the Board each time they submit the declaration with the company.
Such individual shall pass (at least 60% to qualify) an online test conducted by IICA within 1year of inclusion of their name in the data bank. It is pertinent to note that the name shall stand removed from the data bank on failure to pass the test. Also, there are limits on the number of attempts an individual may take for passing such test.
An individual who has served at least 10 years as a director or key managerial personnel (KMP) in a listed public company or an unlisted public company having paid up share capital of 10 crores or more, is not required to pass the test.
Source: Ministry of Corporate Affairs (MCA)
