Experienced Professionals can become independent directors without proficiency Test

Professionals Includes:

  1. an advocate of a court; or
  2. in practice as a chartered accountant; or
  3. in practice as a cost accountant; or
  4. in practice as a company secretary

These professionals need not take the test if they have been practising for ten years in the field.

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Ministry of Corporate Affairs made an announcement of the amendment in the Companies (Appointment and Qualification of Directors) Rules, 2014 vide Gazette id no. CG-DL-E-19082021-229158 dated 19th August, 2021 with an aim to provide relaxation that now the experienced advocates, chartered accountants, cost accountants and company secretaries are exempt from the requirement of a proficiency test in order to qualify for appointment as independent directors on the board of companies.

These professionals need not take the test if they have been practising for ten years in the field. The ministry also made the norms more flexible for officials of central and state governments with expertise to be appointed as independent directors.

Applicability: They shall come into force on the date of their publication in the Official Gazette. And relevant for the professionals who are practicing in the relevant field.

The change in norms aims to make more experienced persons available to be appointed as independent directors on the board of companies.

The ministry also made the norms more flexible for officials of central and state governments with expertise to be appointed as independent directors via amending the Rule 6 (4) (B):

Existing ClauseAmendment via this notification
(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  “(B) in the pay scale of Director or equivalent or above in any Ministry or Department, of the Central Government or any State Government, and having experience in handling,— (i) the matters relating to commerce, corporate affairs, finance, industry or public enterprises; or (ii) the affairs related to Government companies or statutory corporations set up under an Act of Parliament or any State Act and carrying on commercial activities.”.

For appointment as unbiased administrators, the candidates additionally should get their names included in a database of keen and eligible individuals, maintained by the Indian Institute of Company Affairs (IICA).

Source: Gazette Notification

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