The government has stretched out the time given to serving independent directors and eligible candidates to pass a compulsory proficiency test and furthermore facilitated the experience prerequisite for being exempted from the imperative test for veterans. The ministry of corporate affairs has amended the Companies (Appointment and Qualification of Directors) Rules, 2014, effective 18 December, granting two years to such directors to pass the online proficiency test from the date of their incorporation in the information base of independent directors.
Prior to the revision, serving directors and applicants had one year to pass through the assessment from the date they were remembered for the information base of independent directors kept up by the Indian Institute of Corporate Affairs, a body attached to the ministry. According to a change a year ago, all serving directors were required to get their names included in the registry by end of October 2020, which stays unaltered. Be that as it may, they currently have two years from the date of getting registered to clear the test. Aspiring Independent Directors need to get their names registered before they take up the task. They likewise have two years to pass the assessment.
It presently requires a 50% score to pass the assessment compared to 60% before, according to the most recent alteration. The amended rules additionally liberalize the experience requirement for the individuals who have just held directorships to get an exemption from the test, bringing it down to three years from the prior 10 years. The rules presently recognize senior officials of select central ministries and regulatory bodies with three years of corporate governance experience as people exempted from the test.
Accordingly, directors in the ministry of finance, corporate affairs, commerce and industries, heavy industries, and public enterprises with experience in economic, corporate, and securities laws need not take the examination. On account of regulators like Securities and Exchange Board of India (SEBI), RBI, Insurance Regulatory and Development Authority of India (IRDA) or the Pension Fund Regulatory and Development Authority (PFRDA), those in the pay scale of chief general managers with three years experience are excluded from the test.
The move makes it simpler for state-owned and private enterprises to discover people to serve on their board of directors. The proficiency test intends to guarantee that individuals who can comprehend the implications of board decisions are recruited as independent directors, whom regulators, public financial institutions, minority shareholders and potential investors bank on for ensuring good governance.
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