The MCA/Ministry of Corporate Affairs on February 03, 2020, notifies the Companies (Compromises...
The Ministry of Corporate Affairs (MCA), has brought a new notification regarding the appointment and qualification of independent directors. It is notified that the Companies (Appointment and Qualification of Directors) Rules, 2014, have been now amended. These rules will be known as the Companies (Appointment and Qualification of Directors) Amendment Rules, 2020, which will come into force as on the date of their publication in the official gazette.
The amendments are regarding Rule 6, which is related to “Creation and maintenance of databank of persons offering to become independent directors”. In the exercise of the powers provided by section 149 read along with section 469 of the Companies Act, 2013, the Central government has made the rules as follows:
In the exercise of the powers provided by Section 149 read along with Section 469 of the Companies Act, 2013, the Central government has made the rules.
The amendments are regarding Rule 6, which is related to “Creation and maintenance of databank of persons offering to become independent directors” which is known as Companies (Appointment and Qualification of Directors) Amendment Rules, 2019. It came into effect since 1st December 2019.
In Rule 6, the following rules were with reference to Rules 2019:
Such person shall apply online to institute for the inclusion of his name in the databank, within a period of three months from such commencement of the company for a period of either for 1 year or 5 years or for his lifetime. These steps will be taken from time to time until the director continues to hold the office of an independent director in a company as specified under sub-rule (2).
The appointment and qualification of directors is essentially required for any of the company. The directors have the key role in the company as they act on behalf of the private company. Therefore, it is mandatorily required for the inclusion of the independent director of the company in the databank. The window was for three months in 2019 which is substituted with the five months in the amendment of 2020. Other major changes were that firstly, no director with the experience of more than 10 years is required to pass the online proficiency self-assessment test. Secondly, the word companies include the word bodies corporate from now as well.rule_28022020