Independent Directors are key pillars for every kind of organization as they bring out the company with lots of skills and governance. They played very crucial role of monitoring and advising.

Advising and monitoring requires right attitude and skill which will match the working of organization.

APPLICABILITY OF INDEPENDENT DIRECTORS

Section 149 (4) of the Companies Act, 2013 defines as:

Every listed public company shall have at least one-third of the total number of directors as independent directors &

The Central Government may define the minimum No. of independent directors in case of any class or classes of public companies.

*any fraction contained in such 1/3 number shall be rounded off as one 1.

Rule 4 of Companies (Appointment and Qualification of Directors) Rules, 2014 defines as:

Minimum 2 directors as independent directors for Public Companies for the class of companies mentioned below –

(i) Paid up share capital of 10 crore rupees or more; or

(ii) Turnover of 100 crore rupees or more; or

(iii) Debentures, loans and deposits, exceeding 50 crore rupees in aggregate which are outstanding in nature

** Paid up Capital/ turnover or outstanding loan, debenture and deposit as the case may be as existing on the last date of latest audited financial statements shall be taken into consideration.

TERM OF APPOINTMENT

An Independent Director can hold office for a term of 5(Five) consecutive years.

Special Resolution is required for further terms of 5 years and disclosure is also required in Director’s Report. After the expiry of 2 terms of 5 years period he cannot be re-appointed as an Independent Director.

DATABANK FOR INDEPENDENT DIRECTORS

Ministry of Corporate Affairs has through notification no. G.S.R. 804(E) dated 01.12.2019 prescribed rules called the Companies (Appointment and Qualification of Directors) Fifth Amendment Rules, 2019 for Independent Director who are eligible as well as willing  to appoint as Independent Director and rule must be follow out before the appointment of independent director as well for those who are already appointed.

REQUIREMENTS:

• Apply online to institute for inclusion of his name in the data bank for a period of one year or five years or his life time till he continues to hold the office of an independent director;
• Membership to be renewed within 30 days from the date of expiry of period upto which the name of the individual was applied for inclusion in the data bank;
• Declaration of compliance is required every time as Section 149 (7) of the Act;
• Online proficiency self-assessment test within one year from inclusion of his name in the data bank is mandatory requirement by every director.

Databank for Independent Directors (IDs)

Rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2014 very well defined the creation and its maintenance of Data Bank for Independent Directors.

Procedure for Inclusion of NAME in the databank of Independent Directors

1. Go to Ministry of Corporate Affairs site and Login via Login credentials;

2. After Login Through MCA Services go to Register as Independent Directors tab;

3. Enter DIN (If have) otherwise PAN Details;

4. Send OTP to the number you are going to provide;

5. Then go to independentdirectorsdatabank.in and login with ID and Password received on mobile number;

       6.Fill the required details and submit; and

       7. Pay the prescribed fees (Current its Rs.5,000/- for one year with GST).

Independent Director’s Databank empanelled individual will have to follow these steps for attempting the Online Proficiency Self-Assessment Test:

Log into the Databank; Dashboard; Select the slot; Attempt the test as per the slot booked; Test result and reports will get publish; There is no limit on the number of attempts to pass the test.

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