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Experienced advocates, accountants can become independent directors without proficiency test: MCA

2021-08-20 00:00:00.0 铸币报-政治原网页

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, the government said on Thursday.

As per the Companies (appointment and qualification of directors) Amendment Rules, 2021 notified by the ministry of corporate affairs, these professionals need not take the test if they have been practising for ten years in the field.

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The ministry also made the norms more flexible for officials of central and state governments with expertise to be appointed as independent directors.

Earlier, the norms had specified that directors or above in the central ministries of finance, corporate affairs, commerce, heavy industries and public enterprises having experience in handling matters related to corporate, securities or economic laws were exempt from the proficiency test.

The new norms introduced on Thursday exempts all directors, equivalent or above in any ministry or department of central or state governments from the test. This is subject to the rider that they need to have experience in handling matters related to commerce, corporate affairs, finance, industry or public enterprises or the affairs related to government companies or statutory corporations set up under any law and carrying on commercial activities.

For appointment as independent directors, the candidates also have to get their names included in a database of willing and eligible persons, maintained by the Indian Institute of Corporate Affairs (IICA), a government institution.

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

The proficiency test seeks to ensure that only persons who can understand the implications of board decisions are hired as independent directors, whom regulators, public financial institutions, minority shareholders and potential investors bank on for ensuring good governance.